Anna 
The Indian rupee faced a decline on Thursday, weighed down by year-end dollar demand from importers and a cautious sentiment triggered by a sudden halt in global equity rallies.
As of 10:50 a.m. IST, the rupee stood at 83.25 against the U.S. dollar, marking a 0.1% decrease from its previous close of 83.17. The foreign exchange trader at a state-run bank noted that the demand for the dollar is likely to remain robust as importers square their positions heading into year-end.
The dollar index experienced a slight dip to 102.3 after a 0.3% climb overnight on Wednesday. In contrast, broader Asian currencies remained largely subdued. The 10-year U.S. Treasury yield fell to its lowest level since July during the overnight session in New York, quoting at 3.86%. The 2-year yield also slipped 7 bps to 4.36% and showed little change during Asia hours.
The rupee faced additional pressure from risk aversion as the optimism surrounding equity rallies, fueled by expectations of Federal Reserve rate cuts in 2024, waned. This shift was exemplified by the S&P 500 Index registering its worst session in almost three months on Wednesday.
Domestic benchmark equity indices, including Nifty 50 and BSE Sensex, also reflected a slight downturn on Thursday.
Gaurang Somaiya, a forex and rates researcher at Motilal Oswal Securities, predicted that the rupee would continue to operate within a narrow range, with potential downside limited near 83.35 in the near term. Investors are closely monitoring statements from Fed officials, who have both signaled and pushed back on rate cut expectations since Friday. Philadelphia Federal Reserve President Patrick Harker, for instance, remarked on Wednesday that while it’s crucial for the Fed to commence lowering rates, the process doesn’t have to be swift, stating, “we’re not going to do it right away.”
