Rupee eyes breakthrough against weakening Dollar

Rupee eyes breakthrough: The Rupee is poised to break through a key resistance level following a decline in the US Dollar and US Treasury yields, prompted by comments from Federal Reserve Chair Jerome Powell.

Forecasts suggest the Rupee will open steady to slightly higher against the US Dollar compared to the previous session. Traders are now watching whether the currency pair will fall below the crucial levels of 82.80 and the year-to-date low of 82.77.

Market observers speculate whether the Reserve Bank of India will permit further depreciation of the rupee, as the central bank has been actively managing dollar inflows to curb any potential appreciation.

Powell's remarks indicating a potential reduction in the Fed's benchmark interest rate later in the year have led to a decline in the dollar index and US Treasury yields. However, uncertainty remains regarding the timing of rate cuts due to inflation concerns and robust economic activity data.

According to ING Bank analysts, the Fed may consider rate cuts starting from June, particularly with signs of a cooling job market. Investors have adjusted their expectations, with reduced odds of rate cuts in March and May but increased likelihood in June.

Key indicators include the one-month non-deliverable rupee forward, the dollar index, Brent crude futures, and the ten-year US note yield. Foreign investment data shows mixed activity in Indian equities and bonds on March 5th.

(With Reuters Inputs)