The Indian weakened sharply against the dollar on Monday as the stronger-than-expected US jobs report rekindled concerns over aggressive rate hikes by the Federal ReserveFederal Reserve, dealers said.
At 10: 00 am IST, the price was 79.54 per dollar against 79.25 per dollar at the previous close.
The numbers released after Indian trading hours on Friday showed that 528,000 jobs were added in the previous month, with the unemployment rate falling to a fifty-year low.
With economic growth in the US showing strong momentum, the is likely to opt for steep rate increases in order to rein in 40 year high inflation in the world's largest economy.
The index, which measures the US against six rival pairs, was last at 106.58. The index was at 105.88 at 3: 30 pm on Friday.
Since March 2020, interest rates have gone up by 225 basis points. Recent sets of weak US economic data had led to speculation that the Fed was slowing down the pace of rate hikes in the coming months.
Dealers said that the jobs data has led to a reversal of that view.
The Indian opened 21 paise lower at 79.45 previous close of 79.24 as the dollar index tracks the dollar against a basket of peer trading around 106.7 levels after non-farm payrolls came better than expected 528 k vs 250 k expected and a decrease in the unemployment rate in June, traders from Mecklai Financial Services wrote.
We think these figures will give the Fed the confidence it needs to continue its fight against inflation. The US 2 year yield and 10 year yield are at 3.21 and 2.81 respectively, the firm said.