Rupee leans on RBI support to soften imapct of flows, weak Asian cues

The Indian rupee is expected to open on the defensive on Friday, on weak Asia risk and flow ‍pressures, with traders saying the ​central bank remains a key backstop to prevent a move past the 92 level.

The one-month non-deliverable forward showed the rupee remains vulnerable to a break past 92-per-dollar level, with the currency likely to open at 91.90-91.96.

The rupee hit an all-time low of 91.9850 on Thursday, pressured by dollar-buying tied to NDF ​maturities and a chronic mismatch between dollar demand and supply.

Bankers said it was sustained intervention by the Reserve Bank of India that prevented a further slide, with the central bank stepping in to defend the 92-per-dollar threshold.

"It is hardly a surprise that 92 was defended, most would have expected that," a currency trader at a private sector bank said.

"However, you can't count on it being a hard stop. Recent price action suggests they will not defend it too aggressively."

The rupee is down about 2.3 per cent so far this month and is headed for its worst monthly performance since September 2022, weighed down by a confluence of largely domestic factors.

Bankers cited increased dollar demand from banks linked to bullion ‌imports, persistent equity outflows and a build-up ​of depreciation expectations. Exporters, meanwhile, have been slow to hedge, constraining dollar supply and adding pressure on the currency.

Asia, Oil Headwinds

The rupee faces headwinds from weaker Asian peers, after regional currencies and equities fell alongside US equity futures ‍on report that the Trump administration is preparing to nominate Kevin Warsh as the next US Federal Reserve chair.

Warsh is seen by analysts as ‍an ‌independent pick rather ​than someone closely aligned with US President Donald ‍Trump.

Oil prices, meanwhile, are headed for their biggest monthly rise in years amid ‍heightened ‍tensions in the ‌Middle East over a possible US attack on Iran.