By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee weakened marginally on Monday and forward premiums declined, while market participants looked for cues on the pace of the Federal Reserve’s rate cuts in a data-packed week.
The rupee was at 83.8775 to the U.S. dollar at 10:29 a.m. IST compared to its previous close of 83.8625.
Other Asian currencies were down between 0.2% and 0.5%, and the dollar index was little changed at 101.74.
Traders await the U.S. ISM manufacturing and services prints, along with the JOLTS job openings, ADP private payrolls and the weekly jobless claims data due this week.
The highly-anticipated non-farm payrolls report is due on Friday.
“It will not be an exaggeration to say that this Friday’s U.S. jobs report will be most important in a long time for fx and rates,” a currency trader at a bank said.
“For the rupee, well, one can hope that it will at least have a bit of impact.”
Fed Chair Jerome Powell’s comments on the U.S. labour market at Jackson Hole last month have made this Friday’s the payrolls report more significant than usual.
This week’s jobs data will likely be a deciding factor for the Fed to start with a 25 or 50 basis points cut, HSBC Bank said in a note.
Considering all the data that is lined up, this is a “make-or-break week” for the dollar, it said.
Currently, investors are pricing in a 30% probability of a 50 bps rate cut and 70% for a 25 bps.
PREMIUMS DIP
The dollar/rupee forward premiums retreated slightly, with the 1-year implied yield down 1 bps. Forward premiums have been on an uptrend over the last one-and-a-half months amid the Fed rate cut expectations.
(Reporting by Nimesh Vora; Editing by Varun H K)
