Rupee edges down tracking weakness in regional peers

The Indian rupee declined on Monday tracking weakness across other major Asian currencies, while investors looked for data to gauge the pace of monetary policy easing by the Federal Reserve.

The rupee settled at 83.9175 to the US dollar, compared to its previous close of 83.8625.

Other Asian currencies were down between 0.2 per cent and 0.7 per cent, and the dollar index was marginally lower at 101.65.

"The expectation that the Reserve Bank of India will intervene around 84 is capping the decline of the rupee and preventing long bets on the dollar," said a forex trader at a private sector bank.

The RBI has intervened in the market to prevent undue volatility in the rupee and has sold dollars from its forex kitty when the currency edged towards a record low, traders said.

The rupee has been able to "find a floor" around the crucial 84 mark, said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet. "In the coming days, we foresee the rupee edging higher towards the 83.40 level."

All eyes will now be on the upcoming US jobs report, which will be critical in assessing the health of the labour market in the world's largest economy, and its potential impact on the rupee, Sachdeva said.

The highly-anticipated non-farm payrolls report is due on Friday.

Fed Chair Jerome Powell's comments last month that the slowdown in the US labour market is "unmistakable" have made the report more significant than usual.

Investors are currently pricing in a less than 30 per cent probability that the Fed will cut rates by 50 basis points at its September 17-18 meeting.

Traders also await the US ISM manufacturing and services prints, along with the JOLTS job openings, ADP private payrolls and the weekly jobless claims data due this week to further assess the extent of policy easing by the Fed.