By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee is expected to open modestly stronger on Friday, benefiting from a broadly weaker dollar that was weighed down by positional adjustments as traders recalibrated their expectations about U.S. President Donald Trump’s policies.
The 1-month non-deliverable forward indicated that the rupee will open at around 86.60 to the U.S. dollar compared with 86.66 in the previous session.
The dollar index declined to a more-than-two-month-low of 106.3 on Thursday and was last quoted a tad higher in Asia trading. The offshore Chinese yuan rose to a peak of 7.23, its highest level since late November, before trimming gains.
U.S. President Donald Trump’s remark about a possible trade deal with China and a dip in U.S. bond yields have both weighed on the dollar, DBS Bank said in a note.
Comments from U.S. Treasury Secretary Scott Bessent that the administration had no plans to increase sales of long-dated debt weighed on U.S. bond yields on Thursday.
The rupee should benefit from a broadly softer dollar but could face resistance near 86.50, a trader at a mid-sized private bank said.
“On the flip side, state-run banks have been active around 86.90 levels and above (on USD/INR), which should keep a lid on gains,” the trader added.
The local currency had climbed to a peak of 86.47 last week, largely on the back of heavy-handed intervention by the Reserve Bank of India.
While the prevailing bearish bias on the rupee has eased – as signalled by a reduction in short bets per a Reuters poll – portfolio outflows remain a sore point for the local currency.
Overseas investors have sold over $11 billion of local stocks over 2025 so far on a net basis. “If the dollar weakness persists, it may help ease the equity outflows and help out the rupee some more,” a second trader at a private bank said.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 86.78; onshore one-month forward premium at 18.25 paise
** Dollar index at 106.47
** Brent crude futures down 0% at $76.4 per barrel
** Ten-year U.S. note yield at 4.5%
** As per NSDL data, foreign investors bought a net $944.7 mln worth of Indian shares on Feb. 19
** NSDL data showed foreign investors sold a net $163.8 mln worth of Indian bonds on Feb. 19
(Reporting by Jaspreet Kalra)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibility for its content.