MUMBAI: The Indian rupee is expected to stay pinned near its all-time low on Friday, with the Reserve Bank of India’s defence of the 88.80-level likely to come under renewed pressure following the dollar index’s climb to a two-month high.
The 1-month non-deliverable forward indicated the rupee will open in the 88.78-88.80 range versus the U.S. dollar, after the currency settled at 88.7825 on Thursday.
The dollar index’s climb to a two-month peak has brought the rupee’s lifetime low mark of 88.80 back into focus, a level that the Reserve Bank of India has been defending all through this week.
While the RBI has put a floor under the rupee, bankers say sustained dollar strength and hedging interest could test the central bank’s resolve.
“Importers are still chasing dollars aggressively,” said a FX salesperson at a private sector bank.
“The smallest dips (in USD/INR) are drawing (dollar) demand, and that’s keeping the RBI on its toes. Whether the next push higher comes today or tomorrow is impossible to call,” he said.
The flow picture for the rupee remains unsupportive. Bankers note importer demand for dollars has stayed heavy, driven by oil and jewellery sector, while exporter flows have been patchy at best. Portfolio flows, too, have offered little relief.
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