USD/INR: Rupee edges up as US bond yields fall from multi-year highs

The Indian Rupee was slightly firmer against the US Dollar on Monday after US Treasury yields pulled back from last month’s multi-year highs, as investors bet the Federal Reserve would likely not raise interest rates further in the current cycle of tightening.

The yield on benchmark US 10-year Treasury Notes was last at 4.589%, after rising above 5% in October.

Data showed on Friday that the US economy had added only 150,000 job positions in October – almost two times fewer compared to September’s revised down figure of 297,000. The NFP growth also fell short of market consensus of 180,000.

The data suggested the US labor market was slowly cooling, since several strikes, including from members of the UAW, pressured the manufacturing payrolls.

Additionally, the unemployment rate in the country unexpectedly rose to 3.9% in October from 3.8% in September.

Markets are now pricing a 7% chance of a Fed rate hike in December, compared with 20% chance a week ago.

According to Dilip Parmar, foreign exchange research analyst at HDFC Securities, the developments are “slightly positive” for the Indian Rupee. Still, foreign fund outflows will probably weigh on the local currency, while keeping it range-bound.

Foreign investors have been net sellers of Indian stocks since September, with some $5.1 billion in equities sold.

As of 8:50 GMT on Monday the USD/INR currency pair was edging down 0.11% to trade at 83.1920.

The exotic Forex pair has been moving within a range of 83.02-83.29 for over a month.