On the day, outflows related to an equity block deal weighed on the rupee, while broad weakness in the dollar and mild exporter hedging helped keep a lid on the currency’s losses, traders said.
The rupee closed at 85.5050 against the U.S. dollar, nearly unchanegd from its close of 85.55 in the previous session. It declined 0.1% on the week after falling nearly 1% the previous week.
The currency hovered in a 84.6250-85.7225 range over a holiday-shortened trading week which saw the currency markets react to a ceasefire between India and Pakistan, a U.S.-China trade pact, developments in trade negotiations between India and the U.S. alongside choppy price action in the U.S. dollar.
India’s benchmark Nifty 50 index hit its highest level since October this week and logged a weekly rise of over 4%. The country’s the 10-year benchmark bond was in the green week-on-week as well.
In the near-term, the rupee is likely to be range-bound between 84.80 and 85.80, said Amit Pabari, managing director at FX advisory firm CR Forex. Traders expect the currency to be influenced by developments on a potential India-U.S. trade deal alongside the broad trajectories of the U.S. dollar and the Chinese yuan. Asian currencies were mostly higher on the day with the Korean won leading gains. The dollar index was a tad lower at 100.7, weighed down by heightened odds of rate cuts by the Federal Reserve later this year.
The dollar is “likely to find structural depreciation the path of least resistance,” Richard Yetsenga, group chief economist at ANZ wrote in a Friday note.
