MUMBAI: The Indian rupee is expected to open higher on Friday after a recovery in US equities dampened the demand for the safe haven dollar.
Non-deliverable forwards indicate the rupee will open at around 83.20-83.22 to the US dollar, compared with the previous session’s closing at 83.2775.
US equities recovered from Wednesday’s selloff, with the S&P 500 climbing a percent. The dollar index made a low of 101.73 in the New York session, a level not seen since mid-August.
Asian currencies were up 0.1%-0.4% and shares rose. An opening uptick in the rupee, alongside Asia, “is all that may happen”, a FX trader at a bank said.
USD/INR is “back to being well bid on dips” and “difficult to see much of a drop below 83.20”, he said.
The USD/INR pair ran into consistent buying interest on Thursday, due to oil companies seeking dollars.
The dollar index was not helped by the US GDP expanding at a slower pace than was expected in the third quarter.
Third-quarter US GDP growth was revised down to 4.9% from 5.2%.
Economists polled by Reuters had anticipated that GDP growth would be unrevised. “USDINR could again stay in a range for a few more days.
The next important data point is the US PCE inflation,“ said Srinivas Puni, managing director at QuantArt Market Solutions.
The core US PCE (Personal Consumption Expenditures) data due later in the day is the Federal Reserve’s preferred inflation gauge. Economists polled by Reuters expect a0.2% month-on-month rise in core PCE price index.
The data comes in the backdrop of investors pricing in a high probability of the Fed cutting rates as early as in the March meeting, despite resistance from policymakers.
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