By Anushka Trivedi
MUMBAI, Feb 15 (Reuters) - The Indian rupee hit a
one-month low on Wednesday, tracking its Asian peers, while
forward premiums eased on worries over the U.S. Federal
Reserve's interest rate hike trajectory.
The rupee finished at 82.8025 per dollar, compared
with its previous close of 82.7550. It fell up to 82.8975, its
weakest level since Jan. 4.
Volumes on the interbank order matching system were around
$4.15 billion on Wednesday, their lowest this year, amid a
range-bound movement in the currency.
Traders see 82.90-83 as a tough level to breach.
"One can be tempted to sell USD/INR here as the stop loss
level is near and well-defined," said Anindya Banerjee, head of
research - fx and interest rates at Kotak Securities.
Asian stocks and currencies slid after data showed the U.S.
headline consumer inflation index in January rose 6.4% on an
annualised basis, higher than economists' expectations of 6.2%.
Fed officials on Tuesday said they would need to keep hiking
rates, with the New York Fed President saying rates could even
be between 5.0%-5.50% by the end of the year.
"The debate is between one 25-bps or two 25-bps hikes
before the Fed is done. However, the U.S. retail sales data (due
later in the day) may have an additional impact on U.S. bond
yields and the dollar," Kotak's Banerjee added.
Money markets have fully priced in a 25 basis points (bps)
hike by the Fed in March and are almost certain of one more in
May. Chances of a 25-bps hike at the June meeting have also
increased to 46% from 6.2% a month ago, CME FedWatch tool
showed.
The dollar index climbed, taking support from
elevated U.S. yields.
USD/INR forward premiums slipped, with the 1-year implied
yield touching a six-week low of 2.06%. Traders
cited absence of public sector banks as also a reason for their
decline. Meanwhile, India's merchandise trade deficit in January hit
its lowest in a year at $17.75 billion as imports declined.
(Reporting by Anushka Trivedi; Editing by Sohini Goswami)
anushka.trivedi.thomsonreuters.com@reuters.net))
