Rupee snaps six-session winning streak as firmer dollar pinches

Wednesday's session ended with the rupee weaker. It snapped a six-session gain streak. A firmer dollar and month-end demand from importers drove the move, dealers said.

The dollar index touched a multi-week high. Several Federal Reserve officials pushed back against near-term rate-cut expectations, keeping Treasury yields elevated. That sucked capital out of emerging markets, a Mumbai-based dealer said.

The Reserve Bank of India was seen offering dollars in the spot market, traders said. One dealer said the central bank stepped in near 83.10 to smooth the move rather than defend a specific level. The rupee closed at 82.95, down from 82.77.

Brent crude held above $82 a barrel, a level that keeps India's import bill elevated. The combination of a stronger dollar and high crude prices has historically weighed on the rupee, and dealers said the pattern is repeating.

The next major test comes Friday with the U.S. payrolls report. A strong reading would reinforce expectations that the Fed will hold rates steady, likely pushing the dollar higher, several traders said. A weak number could revive bets on a rate cut, taking some pressure off the rupee.

The rupee's move also pulled equity indices lower. The Nifty 50 fell about 0.3%. Stocks with offshore revenue exposure saw mixed reactions. HDFC Bank, tracking the index lower, carries an Alpha Score of 43 at AlphaScala. Infosys, scoring 57, showed more moderate price action but still lagged the broader market.

The RBI's next policy decision is set for early April. The rupee will likely track the dollar and the central bank's intervention until then, traders said.