Indian rupee slips to near two-week low on Fed taper talk
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MUMBAI - The Indian rupee weakened on Tuesday to its lowest level in almost two weeks, in line with other Asian currencies, which fell tracking broad dollar strength amid concerns the U.S. Federal Reserve will taper its stimulus sooner than expected.
U.S Treasury yields rose overnight and pulled the dollar up after record-high job openings raised prospects of the Fed reducing bond-buying and tighten its massive coronavirus-driven stimulus.
The partially convertible rupee ended at 74.42/43 per dollar, compared with its close of 74.26 on Monday. The unit fell to a low of 74.4625 during the trade, its weakest since July 28.
Two Federal Reserve officials said on Monday that the U.S. economy is growing rapidly and that while the labour market still has room for improvement, inflation is already at a level that could satisfy one leg of a key test for the beginning of interest rate hikes.
"The jobs data reignited talks of Fed taper starting sooner and it will impact all emerging market currencies including the rupee," a senior currency trader at a state-run bank said.
"I expect the broad range of 74 to 74.80 to hold for the week," he added.
Asia's emerging currencies dropped against a buoyant greenback alongside COVID-19 curbs in various parts of the region weighing on sentiment. [EMRG/FRX]
The rupee recovered to 74.3375 briefly, helped by dollar sales by foreign banks, though the unit came under pressure again towards the close of trade with stocks paring early gains. [.BO]
