RBI’s shadow, Asia tailwind likely to lift Indian rupee at open

MUMBAI: The Indian rupee may open slightly higher on Thursday, supported by the central bank’s resolve to defend a key level and a modest rise in Asian peers.

The 1-month non-deliverable forward (NDF) indicated the rupee will open in the 88.60 to 88.62 range versus the U.S. dollar, having settled at 88.6550 on Tuesday. Indian financial markets were shut Wednesday for a local holiday.

The Reserve Bank of India intervened on Tuesday, both in the NDF market before the local open and in the onshore spot market, reinforcing its intent to prevent the rupee from weakening past the 88.80 level.

The central bank’s dollar sales continued through the session, with bankers citing persistent offers around the 88.64–88.66 zone.

The intervention echoed a similar playbook from mid-October, when the RBI’s actions had triggered a rally in the rupee from near 88.80 to above 88.

“It’s obvious the RBI doesn’t want a print beyond 88.80, at least for now,” said a currency trader at a private sector bank.

“That said, there’s still a ton of natural (dollar) demand out there — oil, hedging, gold — so I don’t see a drop (in dollar/rupee) despite all this intervention.”

Asia offers slight boost

Most Asian currencies were higher against the U.S. dollar on Thursday, with risk sentiment buoyed by the recovery on Wall Street.

Better-than-expected U.S. data encouraged investors back into risk assets, lifting regional FX.

Data on Wednesday showed U.S. services sector activity rose to an eight-month high in October, while private payrolls increased by 42,000, beating forecasts.

U.S. Treasury yields firmed after the data, underscoring the economy’s resilience and prompting a slight pullback in expectations of a Federal Reserve rate cut next month.