Key Points
- Rupee closed at 87.36 per US dollar, down 11 paise day-on-day.
- Global crude softened, but dollar strength and foreign fund outflows weighed on the currency.
- Traders cited suspected RBI dollar selling to curb volatility, limiting the downside.
- Bond yields steady; risk sentiment cautious ahead of key global data and Fed commentary.
- Importers advised to hedge near-term payables; exporters eye rallies to add cover.
New Delhi: India’s rupee weakened by 11 paise to settle around 87.36 against the US dollar on Friday. The decline came even as international crude oil prices softened typically supportive for the rupee by easing India’s import bill. The move reflects broader dollar strength and persistent month-end demand for dollars from importers, alongside cautious risk sentiment.
Why The Fall Was Limited
Market participants pointed to likely central bank intervention to smooth volatility. Suspected dollar sales around intraday highs curtailed a larger slide, helping keep the rupee within a narrow range. Such operations typically aim at preventing disorderly moves rather than targeting a specific level.
Key Drivers At Play
- Stronger US dollar: Safe-haven bid and higher US yields kept the greenback firm versus most Asian peers.
- Oil pullback: Brent/WTI eased, offering partial relief to India’s trade dynamics but not enough to offset dollar demand.
- Equity flows: Intermittent foreign outflows and importer hedging added pressure on the rupee.
- Risk tone: Global markets stayed cautious ahead of upcoming US data and central bank remarks.
Market Impact and Levels To Watch
- Spot USD/INR: Support seen near 87.10–87.20; resistance around 87.50–87.70.
- Bond market: Benchmark yields largely steady, reflecting contained currency volatility.
- Equities: Mixed cues as global risk drifted; domestic sentiment range-bound.
What It Means For Businesses
- Importers: Consider layering hedges on dips; maintain cover for near-term payables given event risk.
- Exporters: Use upticks toward resistance to enhance receivable hedges; staggered approach recommended.
- Treasuries/CFOs: Watch US data, crude trajectory, and local liquidity conditions for near-term direction.
What To Track Next
- US macro prints and Fed commentary for cues on dollar and yields.
- Crude oil momentum sustained softness can aid rupee stability.
- Foreign flow trends in Indian equities and debt.
- Any further signs of central bank activity around key technical levels.
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