rupee slippage; Forward premiums rose more ahead of Reuters’ U.S. wage revisions

By Jaspreet Kalra

MUMBAI (Reuters) – The Indian rupee weakened on Wednesday, pressured by importers’ dollar offers, while forward premiums rose, with traders anticipating a sharper rise if revised U.S. payrolls data rekindled concerns about an economic slowdown.

The rupee was at 83.86 against the US dollar at 10:15 AM IST, compared to its previous close of 83.7925.

The currency touched a two-week high of 83.7550 in the previous session but retreated as importers bought dollars, traders said.

The rupee is widely expected to hover between 83.70 and 83.90 in the near term, with traders taking cues from any change in expectations about the depth and pace of interest rate cuts the US Federal Reserve may deliver.

Investors are currently pricing in about 100 basis points of rate cuts in 2024.

Swap traders will be closely watching revisions to US payrolls data, along with minutes of the Fed’s latest policy meeting, both due later in the day.

The revised data will cover the 12-month period ending in March 2024 and may signal that job growth may have been weaker than expected.

“The (US) Bureau of Labor Statistics may revise nonfarm payroll employment down by about 300,000 to 1 million jobs between April 2023 and March 2024. So the labor market may not have been as strong,” MUFG Bank said in a note.

Weakness in the data could “once again fuel recession worries and drive the 1-year yield to 2.10%-2.11%,” said a swaps trader at a state-owned bank. The default 1-year yield was last quoted up 2 bps at 2.06%.

Concerns about a slowdown in the US could also weigh on risk appetite, prompting exits from local stocks, the trader added.

Overseas investors have net sold nearly $2.6 billion in local stocks so far this month.