The Indian rupee is poised
inch higher on Friday on expectations of central bank support,
which are likely to counter tepid Asian cues and continued
portfolio outflows, traders said.
The 1-month non-deliverable forward indicated the rupee
will open in the 89.90-89.94 range versus the U.S.
dollar, having dropped 0.15 per cent to 90.0175 on Thursday.
The currency slipped in the last session despite another
bout of intervention by the Reserve Bank of India.
While it climbed to near 89.75 following RBI’s dollar sales,
the rally quickly fizzled, echoing a similar lack of
follow-through after Wednesday’s intervention.
“Importers are hedging pretty aggressively when the dips (on
dollar/rupee) come. And, portfolio flows haven’t picked up and
the trade-deal headlines aren’t convincing,” a currency trader
said.
“It’s no surprise that the rupee is not making much headway
despite all the RBI intervention.”
Explaining Friday’s higher opening, he said the dollar/rupee
slipped quickly toward 89.90 after market hours, which was
expected to influence how the currency opens.
On the U.S.-India trade deal, President Donald Trump
recently warned of higher tariffs on New Delhi over its
purchases of Russian oil and has backed a bill to sanction China
and India over those imports.
Bankers said the latter is currently seen a less immediate
risk.
Meanwhile, Asian cues have been broadly unsupportive of the
rupee this week.
Regional currencies were mostly lower on the day, extending
losses before a key U.S. jobs report that is expected to shed
light on the labour market and the Federal Reserve’s policy
path.
Economists polled by Reuters expect US non-farm payrolls to
rise by 60,000 and see the unemployment rate at 4.5%.
“Barring a dramatic data print, the unemployment rate is
likely to be the more impactful number,” ING Bank said.
The jobless rate stood at 4.6 per cent in November, and economists
at Morgan Stanley expect it to hold there, which they said would
keep the Federal Reserve on track for a January rate cut.
Key indicators
- Dollar index up at 98.92
- Brent crude futures up 0.7 per cent at $62.5 per barrel
- Ten-year U.S. note yield at 4.18 per cent
- As per NSDL data, foreign investors sold a net $204.5 million worth of Indian shares on January 7
- NSDL data shows foreign investors bought a net $75.9 million worth of Indian bonds on January 7