All-time low possible amid dollar payments, decline in Asian peers
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The Indian rupee may drop to a lifetime low on Friday, pressured by renewed weakness in Asian peers and expectations that dollar payments will persist.
Non-deliverable forwards indicate the rupee will open at 83.67-83.68 to the U.S. dollar, inching past the all-time low of 83.6650 hit in June and slightly weaker than 83.65 in the previous session.
The currency has largely struggled in recent days amid dollar demand for defence and oil payments, according to traders. Weakness has been persistent, with the rupee unable to manage an uptick on Wednesday when other Asian currencies were higher.
"(Dollar) bids all through recent days have pulled it (dollar/rupee) up to this level," a trader at a bank said, adding that while most participants thought the Reserve Bank of India will defend the local currency at 83.60, that did not happen.
"We now will probably see a higher range (on dollar/rupee)."
The RBI has repeatedly in the past intervened to keep rupee from slipping past key levels, the breach of which would lead to a bout of volatility.
DOLLAR RECOVERS
The dollar index inched up in Asia, adding to Thursday's advance when it recovered from a near four-month low. The dollar has been on the defensive amid a firming up of expectations that the Federal Reserve is poised to cut interest rates in few months time.
Data out on Thursday reinforced expectations of a September Fed rate cut. U.S. initial claims increased 20,000 to a seasonally adjusted 243,000 against a forecast of 230,000 claims.
The data points to the ongoing cooling in the U.S. labour market, ANZ Bank said in a note.
The jobless claims data followed softer June non-farm payrolls report.
KEY INDICATORS:** One-month non-deliverable rupee forward at 83.74; onshore one-month forward premium at 7 paise
** Dollar index up at 104.24** Brent crude futures down 0.6% at $84.6 per barrel** Ten-year U.S. note yield at 4.22%** As per NSDL data, foreign investors bought a net $198.7mln worth of Indian shares on Jul. 16
** NSDL data shows foreign investors bought a net $152.8mln worth of Indian bonds on Jul. 16
