Rupee extends trade near its lows even as volatility dips; opens at 88.78/$

Indian Rupee today: The domestic currency opened flat at 88.78 against the greenback on Friday, according to Bloomberg

The Indian Rupee remained under pressure near its record lows but witnessed reduced volatility, supported by the Reserve Bank of India’s (RBI) intervention.

 

The domestic currency opened flat at 88.78 against the greenback on Friday, according to Bloomberg. The currency has fallen 3.71 per cent so far this year, while it also closed at a low of 88.79 on Thursday.

 

The Indian Rupee closed at its lowest level on Thursday, hovering near its all-time closing low, and is expected to open around 88.79 per dollar, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said.

 

   

The RBI is likely to keep a close watch to ensure the currency does not breach the 88.80 mark, although it briefly crossed that level overnight in the non-deliverable forward (NDF) market, Bhansali said. "The Rupee is expected to trade within a tight range, with a possibility of breaching 88.80 if the RBI allows. Exporters are advised to sell their cash proceeds, while importers should look to cover payables on dips."

 

The LG Electronics IPO attracted bids worth over ₹4 trillion but had little impact on the dollar-rupee pair, as most foreign portfolio investors and institutions now use the sell–buy route to hedge against spot movement, analysts said. 

 

The currency's volatility against the dollar has reduced sharply this month, with the rupee volatility index dropping to its lowest for the year, accoridng to Bloomberg. The report added that this drop is due to the likely intervention from the central bank, including in offshore markets. 

 

Analysts noted that the potential US government shutdown and India's trade tariff issues with the US remain key factors that could influence the Rupee’s direction in the near term.

 

Focus for the next couple of days is on Federal Reserve Chair Jerome Powell’s speech and key US data on unemployment and nonfarm payrolls, all of which could drive sharp volatility in the forex market, Jateen Trivedi, VP Research Analyst - commodity and currency, LKP Securities, said. "The rupee range is expected between 88.45-88.95." 

 

Meanwhile, the dollar index traded lower after it rose to the highest level in two months, driven by the weakness in other major global currencies. The measure of the greenback against a basket of six major currencies was down 0.21 per cent at 99.33.

 

In commodities, crude oil prices fell as tensions calmed after Israel began implementing a ceasefire in Gaza after Hamas agreed to release all the hostages it holds. Brent crude price was down 0.09 per cent at 65.16 per barrel, while WTI crude prices were lower by 0.05 per cent at 61.48 per barrel, as of 9:10 AM IST.