World News
USA Crisis : Indian rupee may struggle on rising likelihood of Fed rate hike
The Indian rupee may come under pressure on Monday, after a tentative deal to raise the U.S. debt ceiling made it likely that the U.S. Federal Reserve will raise rates next month.
The Indian rupee may come under pressure on Monday, after a tentative deal to raise the U.S. debt ceiling made it likely that the U.S. Federal Reserve will raise rates next month.
Non-deliverable forwards indicate the rupee will slightly lower from the previous session’s level of 82.575 per U.S. dollar.
Odds of a 25 basis points Fed rate hike at the June 13-14 meeting climbed to 2-in-3 after President Joe Biden on Sunday finalised a budget agreement with House Speaker Kevin McCarthy to suspend the existing debt ceiling until Jan. 1, 2025, and said the deal was ready to move to Congress for a vote.
Asian currencies were mostly lower while equities rose. U.S. equity futures extended Friday’s rally.
Rupee on Friday managed a recovery on back of position adjustments and inability of USD/INR to move convincingly above 82.80, traders said. Portfolio inflows on the equity side have been robust, helping the rupee.
The rupee has a bit of momentum heading into the week, but with Fed rate cuts this year priced out and a hike now likely next week, downside for USD/INR looks limited from here, a trader said.
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