By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee posted its biggest weekly loss in over two months, even as it closed stronger on Friday tracking a rise in its Asian peers and aided by dollar sales from large foreign banks.
The rupee ended at 83.14 against the U.S. dollar, compared to its previous close at 83.2775.
The rupee’s gains on Friday were aided by dollar sales from two large foreign banks, likely on behalf of custodian clients, a foreign exchange at a private bank said.
For the week, however, the currency declined 0.16%, its worst week since Oct. 6, despite the dollar index appearing to be on course for a weekly loss, pressured by rising expectations of interest rate cuts in the United States.
Investors are currently pricing in a slightly above 80% chance that the Federal Reserve will cut rates in March, according to the CME FedWatch tool.
Weaker-than-expected U.S. third-quarter GDP data and a rebound in risk appetite also weighed on the greenback.
The world’s largest economy grew by 4.9% in the quarter, against expectations of 5.2%, according to economists polled by Reuters.
The dollar index fell to its lowest level in over 4 months in Asia and last quoted little changed at 101.75. Asian currencies were mostly stronger, with the Malaysian ringgit leading gains, up by 0.5%.
The rupee is unlikely to see sharp moves and should remain range-bound between 83.05 and 83.35 in the near-term, said Gaurang Somaiya, an FX and rates analyst at Motilal Oswal Financial Services.
Investors now await U.S. personal consumption expenditure (PCE) inflation data, the Fed’s preferred inflation gauge, due later in the day.
The data is expected to show that month-on-month core PCE inflation remained flat at 0.2% in November, according to a Reuters poll.
(Reporting by Jaspreet Kalra; Editing by Varun H K)
