MUMBAI, March 13 – The Indian rupee witnessed its most significant decline against the dollar in nearly three weeks on Wednesday, impacted by foreign outflows. Additionally, the currency faced pressure from the weakening of regional peers, influenced by hotter-than-expected inflation data from the United States.

Closing at 82.8625 against the dollar, the rupee depreciated from its previous close of 82.7675, marking its most substantial single-session decline since Feb. 23. Traders attributed this decline to an outflow of approximately $2 billion related to British American Tobacco’s stake sale in the Indian conglomerate ITC.

Jigar Trivedi, Senior Research Analyst at Reliance Securities, commented, “The outflows resulting from a block deal are, indeed, a temporary setback.” However, he added that given the weakness in the equity markets and the trend in the dollar index, the rupee might further weaken to 83.00 and eventually to 83.20.

Tuesday’s data revealed an increase in the U.S. consumer price index for February, surpassing analyst expectations and suggesting persistent price pressures. While the CPI rose 0.4% in February, meeting forecasts, the year-on-year gain of 3.2% slightly exceeded the expected 3.1% increase. Core inflation also exceeded estimates.

The possibility of a rate cut by the Federal Reserve in May diminished as investors digested the latest data. Expectations for a rate cut in the upcoming meeting next week are almost negligible. The U.S. central bank is scheduled to convene on March 19-20.

Most Asian currencies experienced a decline, with the Korean won dropping by 0.4% following the release of U.S. data. The dollar index rose above 103, while U.S. Treasury yields continued to climb.

In the forward market, USD/INR forward premiums witnessed a decline, with the one-year implied yield down by five basis points at 1.65%.