MUMBAI: The Indian rupee is expected to hold near its all-time low on Friday, finding little relief from the US dollar’s decline before crucial data that is likely to shape the Federal Reserve’s upcoming interest rate decision.
The 1-month non-deliverable forward indicated that the rupee will open barely changed to the US dollar from 83.9825 in the previous session.
On Thursday, the local currency dropped to a record low of 83.9850, narrowly avoiding a fall below the 84 mark on the back of central bank intervention.
The rupee’s intraday moves have been between 2 to 4 paisa in the past three sessions, and “today it will largely be the same”, a currency trader said.
While US jobs data may prompt significant position adjustments across various assets, it is different for the rupee, he added.
“What is there to adjust when the perceived risk of a large move is very low,” the trader said.
Dollar flounders
The dollar was having a difficult time against its major peers and Asian currencies heading into the highly anticipated US August jobs report.
An already important data point has gathered more prominence following recent comments by Fed Chair Jerome Powell that further weakness in the labour market would be unwelcome.
Indian rupee ends moderately higher
Analysts reckon that the jobs report will determine whether the Fed will cut rates by 25 basis points or 50 basis points at the September 17-18 meeting. Economists polled by Reuters expected 160,000 jobs additions and a unemployment rate is pegged at 4.2%.
“A weak labour market report illustrating a further loss of momentum in hiring and rise in unemployment will see the market price in a 50 bps cut,” ANZ Bank said in a note. A recovery in hiring and dip in the unemployment rate will see the market price in a 25 bps cut, it said.
American Dollar Exchange Rate