MUMBAI: The Indian rupee’s ascent to multi-month highs may extend further on Friday, supported by a broad uptick in Asian peers and anticipated portfolio inflows.
The one-month non-deliverable forward indicated that the rupee will open at 84.42-84.44 to the dollar, inching up from its close of 84.4875 on Wednesday. India’s financial markets were shut on Thursday.
The rupee rallied nearly 1% on Wednesday after breaching a key resistance level, marking its best day in more than two years.
The rally was spurred by stop-loss triggers on long dollar positions, inflows, and increased hedging by exporters.
The rupee had been repeatedly testing the 84.90–85.00 zone, where the 200-day moving average resides, a trader at a Mumbai-based bank noted.
Indian rupee hit by geopolitical jitters
“Once it broke through decisively, it triggered a cascade of dollar offers. Now that it done, it will take a lot for the rupee’s momentum to reverse in the near term,” he said.
The rupee’s rally has been all the more impressive considering tensions between India and Pakistan following the deadly militant attack in Kashmir, bankers said, while noting that the recent pickup in equity inflows was likely to persist.
Asia SIA fx rises, focus on US jobs data
Other Asian currencies rose on Friday, with the offshore Chinese yuan rising past 7.2550 per dollar. The dollar index, meanwhile rose for the third straight day on Thursday, pushing past the psychological 100 level.
Focus now shifts to the U.S. non-farm payrolls report due later in the day, for insights into the state of the labour market in the world’s biggest economy, and the Federal Reserve’s potential timing for rate cuts.
A weak jobs print would likely weigh heavily on both the dollar and risk assets, reinforcing the view that the U.S. economy is heading into a more challenging phase, said Chris Weston, head of research at Melbourne-based broker Pepperstone.
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