Business Recorder
MUMBAI: 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 US 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 US-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 US 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.
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