Rupee against Dollar : He Rupee It is expected to rise on Friday after media reports prompted investors to pile on bets that the US Federal Reserve could cut interest rates by 50 basis points next week.
The one-month non-deliverable forward indicated the rupee INR=IN is likely to open at 83.92-83.94 per US dollar, compared with 83.9650 on Thursday.
The dollar was under pressure following media reports from the Financial Times and the Wall Street Journal that the Fed’s decision next week on whether to cut rates by 25 basis points or 50 basis points could be a decisive decision.
This came as a surprise to traders who had all but written off the possibility of a big rate cut following the US jobs and inflation report for August.
The possibility of a 50 basis point rate cut is increasing despite a slightly higher than expected reading on the US producer price index for August and in line with expectations on initial jobless claims.
The dollar index =USD has fallen to near 101 and is less than half a percentage point from its year-to-date low.
With markets having “pulled back slightly” in the direction of a 50 basis point cut by the Fed next week, the dollar is under pressure, ANZ Bank said in a note.
The bank expects the Fed to skip the 50 basis point cut and instead pursue a 25 basis point reduction, noting that “underlying economic and financial conditions do not suggest a more forceful start” to the rate-cutting cycle.
RUPEE REMAINS WITH GOOD SUPPORT AT 84
On Thursday, the rupee again avoided falling below the 84 level, thanks largely to the central bank’s intervention, traders said. It has been more than a month since the central bank managed to prevent the rupee from weakening below the 84 level.
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