By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee slipped on Thursday and dollar-rupee forward premiums eased as traders pared bets on a U.S. Federal Reserve rate cut next month, after minutes of its latest meeting signalled a hawkish lean among policymakers.
The rupee was at 88.72 against the U.S. dollar, down 0.15% on the day. The currency has retreated back to within touching distance of its all-time low at 88.80 after touching a two-week high of near 88.40 in the previous session.
Minutes of the Fed’s October policy meeting reflected an emerging split over whether potential weakness in the job market should take priority over the fact that inflation has been above the central bank’s target for four and a half years.
Traders scaled back wagers on a rate cut next month following the release of the minutes and after he U.S. Bureau of Labor Statistics said on Wednesday it would not be publishing the closely watched employment report for October.
“While Sep non-farm payrolls release will resume tonight, the data is already stale while the next Oct-Nov payrolls report will not arrive until after the Dec FOMC meeting, so there is likely to be little to change FOMC members’ outlook then,” analysts at DBS said in a note.
Asian currencies were down between 0.1% to 0.3% while the dollar index rose past the 100-handle, tracking a jump in U.S. Treasury yields.
Dollar-rupee forward premiums eased as well with the 1-year implied yield down slightly at 2.17%.
While the reassessment of the Fed’s rate cut path presents headwinds for the rupee, traders expect the Reserve Bank of India to continue capping its decline near 88.80, a level that it has defended for nearly two months now.
(Reporting by Jaspreet Kalra; Editing by Nivedita Bhattacharjee)
