NEW DELHI: The rupee climbed 4 paise to 67.41 against the US dollar in early trade on Thursday after the Fed minutes of recent policy meet suggested that the US Federal Reserve was unsure over the path of future rate hikes amid weakness in jobs data and global worries.
The domestic currency had closed 18 paise lower at 67.45 against the US dollar on Tuesday on fresh dollar demand from banks and importers. The currency market was closed on Wednesday on account of Id-Ul-Fitr.
The Fed minutes showed that the pace of improvement in the labour market had slowed while growth in economic activity appeared to have picked up. Although the unemployment rate had declined, jobs gains had diminished as well, they noted.
“Most still expected that the appropriate target range for the federal funds rate associated with their projections of further progress toward the committee’s statutory objectives would rise gradually in the coming years. However, some noted that their forecasts were now consistent with a shallower path than they had expected at the time of the March meeting,” the minutes said.
Most Fed members made only small changes to their forecasts of economic activity and the labour market, the report said, “As they judged it appropriate to avoid over-weighting one or two labour market reports in their consideration of the economic outlook, but they indicated that the recent slowing in payroll employment gains had increased their uncertainty about the likely pace of improvement in labour market going forward.”
The dollar index, which measures the movement of dollar against a basket of six major world currencies, was up 0.03 per cent at 96.01.
Asian currencies including the Korean won, the Japanese yen and the Taiwanese dollar were mostly trading higher against the dollar on Thursday.
The rupee is down 2 per cent so far this calendar.
“We do not know how the negotiations between UK and EU will precede. I think they are going to create a series of short moments of stress. But if you look at in general the behaviour of rupee, I think it has been pretty steady,” said DK Joshi, Director & Chief Economist, CRISILBSE -1.28 %.
“Range bound is what we believe it will continue to be. Our forecast for the end of the fiscal year is that, rupee could appreciate to 66.5 by March 2017,” Joshi said.