Updated March 22nd, 2024 at 08:31 IST

Rupee expected to weaken amid dollar rally, Yuan decline

The rally followed a drop in US initial jobless claims and better-than-expected existing home sales, indicating sustained economic momentum.

Reported by: Business Desk
Rupee | Image:Unsplash
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Rupee in focus: The rupee is anticipated to open on a weaker note on Friday, influenced by robust US economic data strengthening the dollar and the offshore Chinese yuan hitting a four-month low.

Non-deliverable forwards suggest the rupee will start trading around 83.20-83.25 against the US dollar, compared to its previous session's close of 83.1475.

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The dollar index surged to 104.1, marking a 0.7 per cent increase on Thursday, its most notable intraday gain in over a month. 

The rally followed a drop in US initial jobless claims and better-than-expected existing home sales, indicating sustained economic momentum.

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Market observers are attentive to whether the rupee's initial decline prompts exporters to sell dollars, potentially mitigating some of the weakness, as noted by a foreign exchange trader.

Persistent dollar demand from local corporates and outflows for debt repayments have weighed on the rupee recently, with continued trends likely exacerbating depreciation pressures, according to traders.

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Across Asia, currencies experienced declines, with the Korean won leading losses with a 1.3 per cent slump. 

The offshore Chinese yuan also weakened by 0.3 per cent to 7.24 against the dollar.

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Analysts anticipate the rupee to fluctuate between 83.10 and 83.30 during the day, with year-end dollar demand in India's financial market contributing to downward pressure, as explained by Anindya Banerjee, head of foreign exchange research at Kotak Securities.

While no major US economic data releases are scheduled, investors will closely monitor remarks from Fed Chair Jerome Powell and other Fed speakers later in the day.

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(With Reuters Inputs)

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Published March 22nd, 2024 at 08:31 IST