The Indian rupee fell Thursday, following its counterparts in Asian emerging markets, which fell after a string of weak U.S. data fueled concerns about a slowdown in the world’s top economy.
The partially convertible rupee ended at 81.36 per US dollar compared to Wednesday’s closing rate of 81.24.
The currency was up 0.6% in the previous session and market participants were generally positive about the outlook.
“The rupee is expected to appreciate as long as USD/INR remains below the 82 mark,” ICICI Securities analysts said in a note, citing 81.20 as a crucial support zone for the currency pair.
“A string of weak economic data from the US has fueled expectations that the Fed will reduce or even pause the size of rate hikes.”
Lower value in housing data expected later in the day could limit the dollar’s recovery, they added.
In EM Asia, the Thai baht and the Philippine peso led to losses on a sudden rise in the dollar index. Regional stocks also fell, with Indian stocks down 0.3%.
Data showed that US retail sales fell the steepest in a year in December, while industrial production recorded its biggest decline in nearly two years.
US producer prices also fell more than expected in December as the cost of energy and food fell, providing more evidence that inflation was receding.
As markets began to price in slightly lower Fed rates, government bond yields fell to a four-month low.
For the monetary policy meeting that closes on February 1, the Fed is widely expected to raise rates by 25 basis points.
(Reporting by Anushka Trivedi; editing by Janane Venkatraman)
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