By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee extended last week’s loses against the U.S. dollar on Monday, in line with other Asian currencies, on worries that U.S. interest rates were likely to remain high longer.
The rupee was at 82.7275 per U.S. dollar by 10:38 a.m. IST, compared with 82.4975 in the previous session.
The local currency declined 0.8% last week and was in the 82.34 to 82.7950 range.
Like last week, we expect the USD/INR pair to face resistance at 82.80-82.90 levels, a spot trader at a private sector bank said.
It will be a surprise if that level is taken out and will likely spur more quick losses for the rupee, he said.
The weak risk appetite in Asia propped up the dollar, already supported by expectations of a higher U.S. Federal Reserve rate peak and waning rate cut hopes for the current year.
Most Asian shares and U.S. equity futures declined. The dollar index rose to near 103.75 and the Korean won paced losses on Asian currencies.
The U.S. consumer inflation data due on Tuesday will likely dictate the direction for the forex, bond and equity market. The data comes on the heels of a way better-than-expected U.S. jobs report.
“Employment strength provides support for (Fed) further hikes, and market attention now shifts to inflation trends,” Societe Generale said in a note.
“Inflation rates very likely peaked, but disinflation alone is unlikely to trigger a Fed pivot this year.”
According to futures data, investors have scaled back the possibility of U.S. rates being cut after they reached a peak in the middle of the year.
Ahead of Tuesday’s CPI report, revisions to the previous data set showed consumer prices rose in December compared with previous estimates that they had fallen.
(Reporting by Nimesh Vora; Editing by Sohini Goswami)
