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MUMBAI: The Indian rupee is likely to open little changed on Tuesday, doing little to avert its worst monthly performance in two years amid a relatively hawkish Federal Reserve outlook and a likely decline in the pace of intervention by the local central bank.

The 1-month non-deliverable forward indicated that the rupee will open barely changed from its close of 85.5350 per U.S. dollar in the previous session.

The rupee has been in a 84.57-85.50 range this month, which is the widest in 2024, and clocked a decline of 1.25%.

The last time the rupee declined as much was back in December 2022.

The slide however, traders said, would have been steeper if not for the Reserve Bank of India’s regular interventions.

Still, “while the RBI expectedly intervened frequently, the intervention did not have the kind of effect that it previously did,” a currency trader at a bank said.

“The pace of the intervention has possibly moderated.”

The rupee and other Asian currencies have been bogged down this month by the run higher in the dollar index, up more than 2%, and U.S. rates, with the 10-year yield up more than 35 basis points.

Indian rupee slips to record closing low

U.S. President-elect Donald Trump’s expected policies on trade, taxes and immigration have boosted the dollar and prompted investors to demand higher yields on U.S. Treasuries.

The dollar index has rallied more than 4% following Trump’s election win. Trump’s victory is expected to boost U.S. growth and has clouded the U.S. inflation outlook, complicating the Fed’s task.

Earlier this month, the central bank projected it will cut rates only twice next year, half of what it had predicted back in September.

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