MUMBAI: The Indian rupee’s recent weakness is likely to persist on Friday in wake of an upbeat outlook for the US dollar and an expected pickup in the demand for the greenback by importers.
The 1-month non-deliverable forward indicated that the rupee will open at 85.26-85.27 per dollar, a whisker off the all-time low of 85.2825 hit on Thursday.
“Over the next few days, there will be the usual pick-up in demand (for the dollar) from importers that happens near to the end of the month,” a currency trader at a bank said.
The Indian currency is down 0.3% this week, headed for its eighth straight weekly loss.
Indian rupee ends at record closing low
Its relief rallies have been few and shallow amid weak flows and the dollar’s persistent strength.
The dollar remains well supported in the lead up to Donald Trump’s inauguration as US president on Jan. 20 amid expectations that his policies are likely to push up inflation and growth.
That is pushing up US Treasury yields, piling up pressure on rupee and other Asian currencies.
The dollar index, up more than 7% this quarter, managed to cling on to the 108 handle.
The dollar’s recent rally is likely to continue at least into the first quarter, which means “more rounds” pf declines for emerging market currencies, the currency trader said.
Meanwhile, on the domestic front, India’s trade deficit has widened, capital inflows have slowed down and the growth rate has dipped, hurting the rupee.
The currency has dropped 1.75% in this quarter.
Comments
Comments are closed for this article.