The rupee is set to
open modestly stronger on Friday, soothed by a retreat in oil
prices and expectations of foreign portfolio inflows linked to a
large initial public offering, though the currency remains on
track for a weekly decline.
The rupee is expected to open in a 95.75-95.80 per
dollar range, traders said, having settled at 95.93 on Thursday.
Oil prices eased on Friday, extending losses into a third
session, as hopes of alternate ways for barrels from the Middle
East to reach markets outweighed concerns about strikes between
Saudi Arabia and Yemen’s Houthis. Brent oil was last down 0.7 per cent
at $104.1 per barrel.
Traders and analysts are also anticipating sizeable foreign
institutional investor demand for the National Stock Exchange of
India’s $2.3 billion IPO, which is among India’s largest on
record and closes for subscription on Monday.
These two factors, combined with a modest retreat in US bond
yields, may grant the rupee some breathing room, but market
participants expect dollar demand from local importers to stand
in the way of a meaningful recovery.
“Oil remains key, as prices at $80 per barrel or above,
coupled with seasonal deterioration in the current account
deficit toward the end of Q3, remain key risks to INR,” analysts
at BofA Global Research said in a note.
“That would need either consistent capital inflows or RBI
support to keep USD/INR range-bound.”
Elsewhere, Asian currencies were trading between 0.1 per cent and
0.4 per cent stronger while regional stocks also gained.
Investors are keeping an eye on the Bank of Japan’s monetary
policy decision, with the central bank set to raise interest
rates to a 31-year high and pledge to deliver more to counter
inflation risks.
Monetary policy actions remain in focus globally amid
inflationary pressures generated by the Iran war. The US Federal
Reserve raised rates earlier this week while the Bank of England
on Thursday warned it may have to hike if the Middle East war
drags on.