MUMBAI: The Indian rupee is likely to open little changed on Friday ahead of the Reserve Bank of India’s monetary policy decision, even as the dollar index dipped, pressured by a rally in the Japanese yen.
Non-deliverable forwards indicate the rupee will open at around 83.34-83.35 to the US dollar compared, barely changed compared to its close at 83.3525 in the previous session.
The dollar index fell 0.4% overnight and edged lower in Asia to 103.56.
The rupee’s Asian peers were mostly rangebound except for the Korean won, which was rose 1.4%. The Japanese yen extended its gains from Thursday and was up 0.4% amid expectations that the end to Japan’s ultra-low interest rates is nearing.
A softer dollar should aid the rupee slightly on Friday but the local unit is likely to hover in a “very narrow range,” heading into the RBI’s monetary policy decision, a foreign exchange trader at a private bank said.
The Indian central bank is widely expected to keep policy rates unchanged.
India rupee to struggle as weak risk boosts safe-haven dollar
“We expect status quo on rates, whilst retaining the hawkish ‘withdrawal of accommodation’ stance,” DBS Bank stated in a Friday note.
“Despite a resumption in strong inflows … rupee has been kept on the weaker end of the spectrum, reflecting the authorities’ strong intervention presence.”
Overseas investors have bought $3.2 billion worth of Indian equities in December so far, pushing the month’s tally to the highest since July.
The 10-year US Treasury yield ticked up in Asia after falling to 4.12% in New York overnight, its lowest level in 3 months, ahead of closely watched labour market data due in the US later on Friday.
While the US unemployment rate likely remained unchanged at 3.9% in November, non-farm payrolls are expected to have risen to 180,000 up from up 150,000 in October, according to Reuters’ polls.
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