MUMBAI, Aug 25 (Reuters) - The Indian rupee declined on Friday, weighed by the weak risk sentiment and dollar rally in the lead-up to U.S. Federal Reserve Chair Jerome Powell's speech.
The rupee was at 82.66 to the dollar by 11:04 a.m. IST, down from 82.5725 in the previous session. Despite the decline, the currency is headed for its best weekly performance in more than a month.
The rupee this week has been in a relatively wide 82.36 to 83.12 range. The rally to 82.36 came on dollar long stop losses after the Reserve Bank of India told some banks to stop taking new arbitrage positions in non-deliverable forwards.
Attention now shifts to Powell's speech later in the day for cues on the path of interest rates. Risk appetite floundered ahead of the Fed Chair's address, with U.S. equities dropping more than a percent.
U.S. Treasury yields rose and the dollar index climbed to the highest in more than two months.
"Today’s Powell speech and the (U.S.) PCE inflation data might enable some two-way movement in USDINR," said Srinivas Puni, managing director at QuantArt Market Solutions.
He reckons that "any dip in USDINR remains a good opportunity to buy for a longer term."
ANZ, ahead of Powell's comments, noted that the strength in U.S. economic growth recently has exceeded expectations and "will require the Fed to re-emphasise that interest rates need to stay at restrictive levels for an extended period, with possible upside risks." (Reporting by Nimesh Vora; Editing by Eileen Soreng)
