MUMBAI: The Indian rupee is expected to open higher on Friday on the back of a pullback in US Treasury yields and a broadly softer dollar.
Non-deliverable forwards indicate the rupee will open at around 83.12-83.14 to the US dollar compared with 83.21 in the previous session.
The rupee has been flirting with the record low of 83.29 and has largely avoided it, thanks to the Reserve Bank of India’s (RBI) intervention.
“It has been another week where the RBI has once again successfully avoided a big move,” a forex trader at a Mumbai-based bank said. “Having said this, it does seem to me that the RBI is just delaying the inevitable.”
The dollar index retreated in the Asia session to 104.86, having reached a six-month high of 105.15 in the New York session.
The 10-year US yield was down about eight basis points from Thursday’s high of near 4.30%.
Data released on Thursday showed US initial claims fell to 216,000, the lowest level since February and the fourth straight weekly decline. The 10-year US yield inched up following the data, before pulling back.
The US labor market “remains tight”, but there has “been some cooling” and it was likely that the Federal Reserve’s rate hike cycle was complete, ANZ said in a note.
Asian currencies were mostly higher.
Indian rupee warily eyes US yields, oil prices; banks on RBI help
The offshore Chinese yuan underperformed, dropping to near 7.36 to the dollar.
Another round of losses in the yuan suggest that upside on the rupee following the open “will not be much”, the forex traders said.
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