Rupee strengthens to 90.18 per dollar, weekly rally gathers steam before RBI MPC outcome
On Friday, the Indian rupee continued its ascent, marking a notable weekly gain ahead of the Reserve Bank of India's much-anticipated policy update. The currency appeared to benefit from strategic dollar sales, pushing it higher despite a backdrop...
By Reuters |
The Indian rupee added to its weekly rally on Friday ahead of the central bank's policy outcome, aided by possible one-off dollar sales that helped offset a risk-off backdrop.
The rupee strengthened to 90.18 per dollar from 90.3550 in the previous session, taking its weekly advance, sparked by the U.S.-India trade deal, to 2%.
The continued advance came despite challenging external cues. Most Asian currencies weakened, while risk appetite was fragile and foreign investors returned to selling Indian equities on Thursday, typically conditions that would weigh on the rupee.
Bankers said the currency received support from a combination of residual optimism around the trade deal, relatively light market positioning and a decline in U.S. Treasury yields.
"On balance, the negatives outweigh the positives (for the rupee)," said a Mumbai-based currency trader.
"That it has managed to inch higher is unexpected. I am not hearing anything specific; it feels more like a one-off flow."
The focus is on the Reserve Bank of India's policy outcome due shortly. Economists expect the central bank to keep rates on hold.
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Indian equities extended Thursday's pullback, with the Nifty 50 Index down about 0.3%. The rally sparked by the U.S.-India trade deal has now been pared to around 1%.
Foreign investors, who had poured money into local shares on Tuesday following the deal, resumed selling on Thursday, with preliminary data showing outflows of about $200 million.
The decline in Indian equities mirrored weakness across Asian markets, which followed a selloff in U.S. stocks amid concerns over the mounting costs of the artificial-intelligence boom.
The rupee strengthened to 90.18 per dollar from 90.3550 in the previous session, taking its weekly advance, sparked by the U.S.-India trade deal, to 2%.
The continued advance came despite challenging external cues. Most Asian currencies weakened, while risk appetite was fragile and foreign investors returned to selling Indian equities on Thursday, typically conditions that would weigh on the rupee.
Bankers said the currency received support from a combination of residual optimism around the trade deal, relatively light market positioning and a decline in U.S. Treasury yields.
"On balance, the negatives outweigh the positives (for the rupee)," said a Mumbai-based currency trader.
"That it has managed to inch higher is unexpected. I am not hearing anything specific; it feels more like a one-off flow."
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The focus is on the Reserve Bank of India's policy outcome due shortly. Economists expect the central bank to keep rates on hold.
RISK OFF
Indian equities extended Thursday's pullback, with the Nifty 50 Index down about 0.3%. The rally sparked by the U.S.-India trade deal has now been pared to around 1%.
Foreign investors, who had poured money into local shares on Tuesday following the deal, resumed selling on Thursday, with preliminary data showing outflows of about $200 million.
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The decline in Indian equities mirrored weakness across Asian markets, which followed a selloff in U.S. stocks amid concerns over the mounting costs of the artificial-intelligence boom.
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