The Indian rupee gained momentum in early Friday trading, supported by advances in most Asian currencies ahead of anticipated comments from Federal Reserve Chair Jerome Powell later today. By 10:10 AM IST, the rupee stood at 83.8850 against the US dollar, an improvement from its previous close at 83.9525. Asian currencies generally strengthened, with the offshore Chinese yuan increasing by 0.1% to 7.13 and the Thai baht leading with a 0.4% rise. The dollar index showed a minor decline, settling at 101.3.
Despite the weaker dollar, the rupee is expected to hover around 83.75, though the lack of significant inflows and consistent demand for dollars from importers has restricted its movement within a narrow band, according to a foreign exchange trader from a state-run bank. Additionally, local oil companies' demand for dollars on Friday has capped the rupee's potential gains.
Foreign investors have withdrawn approximately $2.1 billion from Indian stocks this month, a stark contrast to the nearly $7 billion net inflows seen in June and July. The rupee is anticipated to exhibit a positive trend today, though any gains are likely to be modest, peaking near 83.80, according to Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
Meanwhile, Federal Reserve policymakers have voiced support for initiating US interest rate cuts as early as next month. Market attention will be on Fed Chair Powell's remarks later today to assess the potential scale and timing of these rate cuts. Interest rate futures currently reflect a 100% chance of a 25 basis-point cut in September, with a 26% likelihood of a 50 basis-point cut, as indicated by CME's FedWatch tool.
