Indian rupee dips as NDF maturities, corporate hedging pinch

MUMBAI: The Indian rupee slipped on Friday, pressured by dollar demand linked to maturing non-deliverable forward positions and corporate hedging as global markets awaited a key U.S. Supreme Court ruling on trade tariffs.

The currency closed at 90.1625 against the U.S. dollar, down 0.1% on the day but little changed week-on-week. Weakness in local stocks also weighed, with the BSE Sensex and Nifty 50 logging their steepest weekly

falls since late September.
Traders pointed to heightened dollar demand at the central bank’s daily reference rate and hedging activity from companies, which weighed on the local unit on Friday.

State-run banks were intermittently spotted offering dollars near the day’s low for the rupee, which helped limit its losses, two traders said.

The central bank stepped in firmly to shore up the currency earlier in the week, but traders said the rupee remains vulnerable without progress in U.S.-India trade talks, or a reversal in portfolio outflows.

India’s trade pact with the United States was delayed because Prime Minister Narendra Modi did not make a telephone call to President Donald Trump to close a deal they were negotiating, Commerce Secretary Howard Lutnick said on Friday.

Foreign investors, meanwhile, have already sold nearly $1 billion of local stocks over January so far, adding to the record near $19 billion outflow last year.

Market participants are also bracing for an approaching Supreme Court decision on President Donald Trump’s use of emergency tariff powers and a key U.S. jobs report later in the day.

A decision against the Trump administration “is likely to see a renewed escalation on trade policy uncertainty which we would argue is US dollar negative although given a ruling against would be less surprising we may not see big market moves,” MUFG said in a note.