MUMBAI: The Indian rupee closed slightly weaker on Friday, steadying just above its all-time low, but sentiment remained skewed against the currency on the back of ongoing US-India trade frictions and portfolio outflows.
The currency remained under pressure even as the dollar was on course to notch its worst week since August against major peers as investors held firm to expectations of policy easing by the Federal Reserve, despite a government shutdown delaying key economic data releases.
The rupee closed at 88.7725 against the US dollar, down marginally on the week but within touching distance of its all-time low of 88.80 hit on Tuesday.
A fortnightly Reuters poll of forecasters released on Thursday showed that the rupee was the most-shorted currency among major Asian peers.
On the day, competing forces drove the rupee’s price action with traders pointing to sustained dollar demand from local importers alongside activity from state-run banks near Friday’s trough of 88.7825.
The rupee is biased towards further depreciation but there is limited appetite to initiate wagers against the currency in case the central bank steps in more strongly to defend these levels, a trader at a mid-sized private bank said.
Frequent interventions by the Reserve Bank of India helped the rupee avert steeper losses this week.
“We continue to forecast INR underperforming core G10 and Asian currencies, and see USD/INR rising above 89.00 over time,” analysts at MUFG said in a note.
Meanwhile, India’s benchmark equity indexes, the BSE Sensex and Nifty 50 closed slightly stronger on the day and notched a weekly gain of nearly 1 percent. Foreign investors net sold over USD2.5 billion of local stocks in September.
Comments
Comments are closed for this article.