Rupee versus Dollar: The Rupee is poised to challenge a significant threshold bolstered by Dollar inflows on Friday, as market participants remain vigilant for potential intervention by the Reserve Bank of India.

Forecasts from non-deliverable forwards suggest the Rupee will open nearly unchanged against the US Dollar from its previous session's close at 82.84.

Commenting on the current market dynamics, a foreign exchange trader noted, "There are plentiful inflows, largely on the capital side and to an extent on the portfolio front."

He added, "What matters now is whether you see a drop (on USD/INR) below 82.75-82.80, and we have a new lower range. Like it has been for several months, all depends on what RBI (Reserve Bank of India) wants."

The RBI refrained from intervening in the market to purchase Dollars late in the session on Thursday, a departure from its actions in the preceding two days, which contributed to the Rupee reaching its strongest level since September on a closing basis.

To breach the 82.75-82.80 threshold, the Rupee will need to confront the uptick in near-term US Treasury yields and diminishing prospects of an imminent Federal Reserve rate cut.

The surge in US equities and encouraging labor market data, including a unexpected decline in new claims for unemployment benefits last week, have propelled US yields higher.

DBS Research commented in a note, "If claims surprise in the next couple of weeks, they could reverse the expectations for February’s US nonfarm payrolls to fall below 200,000 a fortnight from today."

Additionally, robust US existing home sales data further supports the notion that the Fed can afford to maintain a patient approach regarding rate cuts.

The 2-year US bond yield has climbed to its highest level since mid-December, marking a 60-basis-point increase from the year-to-date low.

Key Indicators

• One-month non-deliverable Rupee forward at 82.92; onshore one-month forward premium at 7.50 paisa
• Dollar index inches down to 103.88
• Brent crude futures at $83.36
• Ten-year US note yield at 4.33 per cent
• NSDL data reveals foreign investors bought $47.5 million of Indian shares on Feb. 21, while selling $59.9 million of Indian bonds on the same day.