MUMBAI: The Indian rupee is expected to strengthen at open on Friday, buoyed by widespread U.S. dollar weakness following soft economic data that supported expectations for a Federal Reserve rate cut later this year.
The 1-month non-deliverable forward indicated that the rupee will open at 85.34 to 85.36 to the U.S. dollar compared with 85.55 in the previous session.
The rupee has struggled throughout the week, weighed down by dollar demand for immediate payments, per bankers.
A large state-run bank and two major foreign banks have been active dollar buyers.
Despite the respite offered by the India-Pakistan truce, the rupee remains lower on the week through Thursday and has underperformed its Asian peers.
Indian rupee weakens
The pull of U.S. dollar demand has shifted the near-term bias on the rupee from positive to neutral, a currency trader at a Mumbai-based bank said.
“At these levels and considering the recent price action, it’s hard to hold a high-conviction view,” the trader said.
Meanwhile, India merchandise trade deficit in April stood at $26.42 billion, higher than $20 billion economists had expected.
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