MUMBAI: The Indian rupee logged its sixth straight weekly fall but ended little changed on Friday, as corporate dollar demand offset the impact of a rebound in regional currencies and bets of central bank intervention.
The rupee closed at 83.9550 to the US dollar, slightly up from its previous close of 83.9625. The currency fell 0.2% week-on-week, its worst weekly fall in more than two months. “The Reserve Bank of India (RBI) has been very watchful of the rupee’s movement and has intervened in the spot market to ensure it stays near 84,” Jigar Trivedi, senior analyst at Reliance Securities said.
Trivedi pegs the rupee in a 83.70-84.10 range in the near term, with a downward bias.
The Indian currency hit a record low of 83.9725 on Wednesday, pressured by weakness in the Japanese yen and risk assets, but stayed above the key psychological mark of 84 on dollar sales by state-run banks, likely on behalf of the RBI.
The RBI aims to keep volatility of the Indian unit in check. The central bank, in addition to intervening in the spot, non-deliverable forward and futures market, has directed large banks not to make aggressive bets against the rupee.
Meanwhile, Asian shares and currencies rose after US jobless claims came in lower than expected, allaying concerns about a US economic downturn.
ING said in a note that markets “likely overreacted” to some lower-than-expected jobless claims, and that focus has now shifted to the US consumer inflation data next week to gauge the outlook for interest rates.
The odds of a 50 basis points Federal Reserve rate cut in September have retreated to 53% from 100% earlier this week, at the peak of worries over the Japanese markets.
The RBI on Thursday held its repo rate steady at 6.50% and maintained its ‘withdrawal of accommodation’ stance for a ninth consecutive time.
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