The Indian rupee was mildly stronger on Monday, tracking a rise in its Asian peers, which were aided by a decline in US bond yields after fresh economic data boosted hopes of rate cuts by the Federal Reserve later this year.
The rupee was at 83.44 against the U.S. dollar as of 10.15am IST, up slightly from its close at 83.4850 in the previous session.
Stay up to date with the latest news. Follow KT on WhatsApp Channels.
US Treasury yields and the dollar declined after data on Friday showed that the unemployment rate rose to 4.1 per cent in the United States, while annual wages increased at the slowest pace in three years, pointing to a slackening of the labour market.
The data follows a string of economic indicators that pointed to a cooling of the US economy, which has helped push up the odds of a September rate cut by the Fed to nearly 76 per cent, from about 64 per cent a week earlier, according to CME’s FedWatch tool.
“Asian FX took a breather on the back of broad US dollar weakness … the risk for Asian currencies, though, remains skewed to the downside, with the Fed staying patient,” Lloyd Chan, senior currency analyst at MUFG Bank, said in a note.
Asian currencies were under pressure last week, with the Japanese yen falling to its lowest in 38 years, while the offshore Chinese yuan touched its weakest level since November.
Fed policymakers have largely maintained a wait-and-see stance on the future path of interest rates despite recent weakness in US economic data.
Asian currencies were mostly higher on the day, while the dollar index was at 104.9 after falling 0.2 per cent on Friday.
Traders expect the rupee to continue seeing mostly sideways price action between 83.40 and 83.55.