The Indian rupee is expected to remain lower on Friday, pressured by a rebound in the dollar amid uncertainty over the pace of US rate cuts, while persistent portfolio outflows also remain a cause for concern for the local currency.
The one-month non-deliverable futures contract indicates that the rupee will open at 84.48-84.49 against the US dollar.
The rupee weakened to its all-time low of 84.4925 on Thursday, pressured by outflows from local stocks.
Foreign investors withdrew more than $600 million from Indian stocks on Thursday, according to preliminary stock exchange data.
The intervention of the Reserve Bank of India (RBI) allowed the rupee to limit its losses under the pressure of capital outflows.
“At these levels, the central bank should remain active and only allow a gradual rise (in USD/INR) not exceeding 6-8 paisa per day,” said a trader at a major private bank.
The dollar index, meanwhile, hit its highest level in more than a year on Thursday and was quoted marginally lower at 107.06 in Asian trading.
Recent comments from some U.S. Federal Reserve officials indicated the central bank may slow its rate cuts, which has helped the dollar.
Data on Thursday showed that the number of Americans filing new claims for unemployment benefits fell to a seven-month low, a sign of the resilience of the U.S. economy.
“Interest rate differentials and geopolitical concerns related to the war between Russia and Ukraine continued to work in favor of the dollar,” MUFG bank said in a note.
Russia fired a missile at the Ukrainian city of Dnipro on Thursday in response to decisions by the United States and the United Kingdom allowing kyiv to strike Russian territory with advanced Western weapons.
Asian currencies were mixed on the day, with the Thai baht losing 0.2%, while the Korean won, Indonesian rupiah and Philippine peso edged higher.
KEY INDICATORS:
** Non-deliverable one-month rupee forward rate at 84.61; one-month onshore forward premium at 12.25 paisa.
** Dollar index at 107.06
** Brent up 0.4% to $74.6 per barrel
** Ten-year US bond yield at 4.42%.
** According to NSDL data, foreign investors sold $227.2 million worth of Indian stocks on November 19.
**NSDL data shows foreign investors bought $4.9 million worth of Indian bonds on November 19.
