The Indian rupee declined on Thursday on risk aversion, but losses were kept in check on belief that the Reserve Bank of India would sell dollars. The rupee was at 82.68 to the U.S. dollar by 09:52 a.m. IST, down from 82.5825 in the previous session.
The rupee is now in the “radar zone” that has previously prompted RBI to come in and we reckon RBI “will surely” step in and sell dollars, Amit Pabari, managing director at FX advisory firm CR Forex said. “We expect that the USD/INR pair should top near the 82.70-90 zone and make a reversal towards 82.20-82.00 levels again.”
Apart from the U.S. credit downgrade, the jump in U.S. private payrolls pushed yields higher. U.S. private payrolls rose by 324,000 jobs last month, the ADP National Employment report showed on Wednesday, well above the 189,000 reading economists polled by Reuters had forecast.
“Already nervous about upside surprises in Friday’s U.S. nonfarm payrolls, U.S. bond investors did not like the ADP Employment Survey,” DBS Research said in a note. The Thai baht paced losses on Asian currencies, down 0.7%. The dollar index rose to 102.68.