Rupee marks worst week in two months on Fed rate hike fears
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The Indian rupee ended little changed against the dollar on Friday, but posted its worst trading week in two months on worries over Federal Reserve's rate hike trajectory.
The rupee finished at 82.4975 per dollar, having strengthened up to 82.35 during the session, as compared to Thursday's close of 82.51.
The dollar index see-sawed a bit on reports of academic Kazuo Ueda being tapped as the next Bank of Japan governor.
An over 2% jump in Brent crude futures, on Russia's plans to reduce oil production next month, weighed on the rupee. [O/R]
For the week, the currency fell 0.8% to mark its biggest weekly drop since the week ended Dec. 9, as blowout jobs data last Friday led to a repricing of Fed terminal rate expectations.
No surprise the rupee traded in a narrow range, and it is likely to tread that course till the U.S. inflation print on Tuesday is out of the way, a private bank trader said.
The Fed peak terminal rate expectations have climbed to about 5.15% and the size of rate cuts expected later this year has been scaled back. Fed officials this week have indicated that more rate hikes were needed.
"Fed communication remains important, but secondary to data," ING analysts wrote in a note.
The market is left with one conviction - 25 basis points hike in March - and one outstanding doubt about whether that will mark the peak, which inflation data could help with, they added.
U.S. yields have climbed since the U.S. jobs report, with the 2-year now at near 4.50%.
Asian currencies and stocks were broadly lower on Friday amid tepid risk sentiment.
Indian shares were further hurt after index provider MSCI said it would cut the weightings of Adani Enterprises and three other group firms. [.BO]
(Reporting by Anushka Trivedi; editing by Eileen Soreng)
