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MUMBAI: The Indian rupee is likely to inch higher at open on Friday, relying on support from the central bank, after having dipped to an all-time low amid dollar outflows and the weakness in the Chinese yuan.

Non-deliverable forwards indicate the rupee will open at 83.60-83.62 to the US dollar, compared with 83.6525 in the previous session.

The local currency hit a lifetime low of 83.6650 in the afternoon session on Thursday on outflows and a decline on Asian peers.

The outflow that was talked about was UK-based Vodafone Group’s bigger-than-planned 18% stake sale stake in India’s Indus Towers.

The Reserve Bank of India had defended the 83.5750 handle, the previous all-time low.

“We obviously do not know why the RBI decided to allow this move yesterday. While you can point to the dollar or the outflows, that can’t be the full reason,” a currency trader at a bank said.

Indian rupee squeezed by weak Asia, to be likely boosted by positional flows

“In the past, when we have had this kind of talks on out-of-key levels, the RBI has wrested back control and not allowed expectations of larger move build.”

If the RBI decides that the rupee “is ready” for a new lower level, “you can be assured” it will be at a slow pace, a foreign exchange salesperson at a bank said. The rupee will not receive any help from Asian peers, most of which were down on the day.

The offshore Chinese yuan was at 7.2860, having slipped to a year-to-date low on Thursday. Asian FX is being weighed down by the weaker yuan, MUFG Bank said in a daily note.

The fixing strategy since May by China’s central banks seems to be facilitating measured weakness and allowing slightly more space for depreciation, it said.

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