The Indian rupee is poised to weaken at Friday’s open, mirroring declines in Asian peers and
showing little follow-through to the central bank’s
intervention-driven rally.
The rupee is seen opening near 96.30 to the U.S.
dollar on Friday, per traders, after settling at 96.20 on
Thursday when it climbed 0.64%.
The currency snapped its losing streak on Thursday, driven
largely by aggressive pre-market dollar selling from the Reserve
Bank of India that continued through the session, according to
traders.
The rupee had declined 2.5% over the previous nine days and was
at risk of slipping to 97 for the first time before the
intervention.
Markets will be watching whether the RBI follows up with another
round of intervention, a currency trader at a bank said.
Such follow-through has at times been used in the past to
reinforce the central bank’s discomfort with further rupee
depreciation, he added.
He said that the rupee would otherwise likely come under renewed
pressure, noting that dips in dollar/rupee have been difficult
to sustain and tend to spur higher importer hedging interest.
WEAK ASIA
The rupee will have to contend with weakness in most Asian
peers, while drawing a measure of support from the pullback in
oil. The dollar index held near a six-week high.
Focus remained firmly on U.S.-Iran headlines for cues on
progress in resolving the conflict.
Washington and Tehran continued to hold opposing positions on
Iran’s uranium stockpile and control of the Strait of Hormuz,
although U.S. Secretary of State Marco Rubio noted there had
been “some good signs” in talks.
“It remains unclear whether a breakthrough is imminent,”
MUFG Bank said in a note, while noting that tentative optimism
around a potential agreement was supporting risk sentiment.
U.S. equities rose on Thursday, with futures indicating the
upward momentum could extend.