By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee slipped on Thursday, tracking weakness in Asian currencies and under pressure from import-related dollar demand in the lead-up to U.S. inflation data that could shape the Federal Reserve’s next policy move.
The rupee was quoting at 88.26 to the U.S. dollar at 12:20 pm IST, down form 88.10 on Wednesday. The currency is not far away for the all-time low of 88.36 hit last Friday.
Currency traders said dollar demand from importers for immediate payments was keeping the rupee pinned near its record low, while weak Asian cues offered little support. Asian currencies were down between 0.1% to 0.3% on the day.
A Mumbai-based FX trader said he was surprised the rupee is flirting with a new all-time low.
“With momentum thin, I didn’t expect it to test 88.35 again so quickly. Importers are feeding the dollar demand.”
The rupee’s struggles come amid lingering concerns over U.S. tariffs on Indian goods, which have heightened uncertainty for exporters and are expected to weigh on capital flows.
Persistent unease over U.S. tariffs is driving corporates to fortify their dollar liabilities, bankers said.
ALL EYES ON US INFLATION
Thursday’s U.S. consumer price data will be closely watched for clues on the Fed’s next policy move, coming against the backdrop of softer-than-expected labour market indicators.
Weakness in the U.S. labour market has led to investors nearly fully pricing in a 25-basis-point rate cut next week, though a softer-than-expected inflation print could boost bets on a larger 50-basis-point move, influencing dollar flows.
MUFG Bank said in a note that the possibility of a 50-basis-point cut remains a high bar.
The inflation data is the last big data point before the Fed meets on September 16-17.
(Reporting by Nimesh Vora; Editing by Mrigank Dhaniwala)
