By Nimesh Vora
MUMBAI, Feb 6 (Reuters) - The Indian rupee plunged
against the dollar on Monday, marking its biggest daily decline
in over four months, as an upbeat U.S. jobs report fanned fears
of more rate hikes by the Federal Reserve, prompting analysts to
reassess the prospect of more rate cuts this year.
The rupee fell about 1% to 82.7250 per dollar, its
biggest percentage fall since Sept. 22.
The rupee and other Asian currencies found few buyers after
the U.S. economy added over half a million jobs last month,
blowing past expectations and boosting bets that the Fed would
maintain a hawkish stance.
"The data on Friday challenged the market narrative for rate
cuts later this year on which the January frenzy for risk
assets... was partly built," Societe Generale said in a note.
The dollar index and Treasury yields, expectedly,
surged on Friday. The dollar index inched up further on
Monday while the Thai baht paced losses among Asian currencies.
The Thai currency suffered its worst day in more than two
decades.
The robust U.S. labour market suggests a delayed Fed funds
rate cut, Nomura said in a note.
"We maintain our forecast of one more Fed Funds rate hike in
March to a 4.75-5.0% terminal rate, but no longer expect cuts in
2023," Nomura added.
The focus now shifts to how Fed officials respond. Chair
Jerome Powell is scheduled to speak at the Economic Club of
Washington, D.C. on Tuesday.
"Chair Powell will have a platform tomorrow... and is likely
to repeat that multiple increases in interest rates are
appropriate," SocGen said.
The rupee forward premiums tumbled, tracking the jump in
Treasury yields with the 1-year yield falling about 12 basis
points.
(Reporting by Nimesh Vora; editing by Eileen Soreng)
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