MUMBAI: The Indian rupee is likely to open little changed to the US currency on Friday in the wake of the dollar’s recovery and worries over equity outflows.
The non-deliverable forwards indicated an opening of around 82.12-82.20 for the rupee versus the dollar compared with 82.1725 in the previous session.
The risks are definitely on the side that the rupee could see more losses, a trader at a Mumbai-based bank said. Market participants, once they assess that the current levels are sustainable, will push the pair higher, he added.
On the back of dollar purchases by foreign banks, which market participants said were likely prompted by equity outflows, the rupee was among the worst-performing Asian currencies on Thursday.
Indian rupee likely to open higher after Fed, local equities in focus
Foreign investors sold about $374 million worth of Indian equities on Thursday, according to preliminary data. That is on top of the $3.5 billion worth of withdrawals in January. Outflows have accelerated on concerns over the fallout of the slump in Adani Group shares.
The dollar index had its best session in almost a month on Thursday, helped by the fall in the euro and the pound following the central banks’ policy decisions.
The European Central Bank (ECB) hiked interest rates by a widely expected 50 basis points (bps) and offered no new hawkish surprises, while the Bank of England (BOE) adopted a more dovish tone on inflation.
The ECB signalled another 50 bps hike in March but still failed to surpass hawkish expectations that were baked in over the past few weeks, DBS Group Research said in an email.
The admission that inflation seems to be receding and forward guidance stopping short of cementing a string of hikes pulled Germany yields lower, it said.
A decline in US weekly jobless claims to a nine-month low was an added incentive to buy the dollar.
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