Intervention from the Reserve Bank of India (RBI) helped cap excess volatility in the rupee, traders said. The rupee had strengthened 12 paise on Tuesday to close at 85.71/$1.
US job openings increased for a second straight month to 8,098,000 in November, defying expectations for a decline to 7,740,000, from October’s 7,839,000. Following strong data, the 10-year US treasury bill yields surged to 4.7%.
A peak in yields was last seen in April 2024 at 4.704%
“The RBI was present as the rupee touched 85.86 levels as there was constant dollar buying, along with FPIs selling from Indian equities,” said Anil Bhansali, head of treasury, Finrex Treasury Advisors. “The markets are now pricing in a softer pace of US rate cuts because of the stronger data.”
Foreign portfolio investors sold Rs 3,362.18 crore on Wednesday, BSE data showed.While the US Fed had projected a 50 basis point rate cut in 2025, investors are currently pricing in a 38 basis point cut by the Fed, according to the CMEs FedWatch tool.
Markets now await the non-farm payrolls data due Friday to gauge the trajectory of interest rate cuts in the US.
