Indian rupee finds breathing room, aided by central bank

MUMBAI: The Indian rupee nudged higher on Friday, easing away from its all-time low after spending much of the week pinned near it, as persistent central bank defence of the currency spurred interbank dollar sales.

The rupee closed at 88.6850 against the US dollar, up from 88.7825 in the previous session. The currency was up 0.1 percent week-on-week.

While the currency started the session on a weak note and appeared at risk of falling past its record low of 88.80, traders flagged likely intervention by the central bank which blunted the pressure.

Broad-based interbank dollar sales picked up later in the session, spurred by positional adjustments and merchant flows, an FX salesperson at a foreign bank said.

Analysts are split on what comes next for the South Asian currency, with some predicting that its rough patch may extend while others reckon that the worst may be over as valuations turn supportive.

FX advisory firm IFA Global holds a moderately bearish view on the rupee in the medium term with an implied range of 88.40-89.30 over the next 6 weeks, per a Friday note.

Elsewhere, the dollar was steady against a basket of peers.

The Japanese yen was headed for its steepest weekly drop in a year, while the euro languished near a two-month low on the back of fading hopes of rate hikes by the Bank of Japan and political developments in France.

On the week, the dollar index was up over 1.5 percent, its best performance since November 2024.

Traders say that a meaningful turnaround in the rupee’s trajectory is unlikely in the absence of a bounceback in portfolio flows or positive developments in US-India trade negotiations.

Foreign investors have net sold about USD500 million worth of Indian stocks in October so far. India’s benchmark equity gauges, the BSE Sensex and Nifty 50 ended 0.4 percent higher each.