The Indian rupee saw a recovery on Monday as near-maturity U.S. yields fell following a weaker-than-expected U.S. payroll report. The USD/INR 1-year forward premium rose to 1.3050 rupee, and the implied yield increased by 2 basis points to 1.58%.
The rupee had come under pressure last week as premiums dropped to their lowest level in over a decade amid concerns that U.S. rates could rise more and remain high for a longer period of time.
Non-farm payrolls increased by 209,000 jobs in June, below the expected 225,000. Although the miss was not significant, it followed a jump in private payrolls that had likely reshaped expectations around the NFP data.
Despite slower job growth, analysts believe that robust wage growth and a slight decline in the unemployment rate will keep the Federal Reserve on track to raise interest rates at their upcoming July meeting.
The U.S. unemployment rate dropped to 3.6% from 3.7% in May, while hourly earnings increased by 0.4% on a month-on-month basis.
