The rupee closed at 83.53/$1 on Wednesday, up from the previous close of 83.50/$1, LSEG data showed.
“Yesterday Powell (US Federal Reserve Chair) was hawkish in his speech, and because of that the dollar index fell a bit. The expected NFP data and FOMC minutes on Friday will cause some volatility in the market”, said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
Jerome Powell said that the US In his latest speech there is a return to a “disinflationary path”, which has caused bond yields to fall in the US.
Most Asian currencies fell against the dollar on Wednesday, with Brent crude oil prices higher than yesterday at $86.56 a barrel, up 0.37% from the previous day, according to Reuters. Rising crude oil prices pose upside risks to India’s trade deficit and inflation as the country is a major importer of the commodity.
India’s benchmark 10-year government bond yield eased slightly, closing at 6.99% on Wednesday, having remained flat at 7.0%-7.01% in the past two days.
The bond market is also looking forward to the NFP data coming in the next couple of days and the budget announcement by the end of this month.
“The key for the bond market will be the NFP data and the budget, as we expect borrowing numbers to ease. If that doesn’t happen and the government pushes up capital spending, we may see the yield go up to 7.05% to 7.10%”, said a trader at a public bank.
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