The Indian rupee inched higher on Friday, supported by gains across Asian currencies and increased interbank dollar offers, as exporters stepped up hedging activity.
The rupee traded at 88.6350 per U.S. dollar at 10:20 a.m. IST, slightly stronger than 88.7050 in the previous session, News.Az reports, citing Reuters.
Most Asian currencies rose 0.1%–0.3%, while the U.S. dollar index hovered near 100.1, heading for a weekly gain as traders reduced their expectations of a near-term U.S. Federal Reserve rate cut.
Market pricing now reflects 35% odds of a December Fed rate cut, down from 50% a week ago, according to CME’s FedWatch tool. Chicago Fed President Austan Goolsbee reinforced caution on Thursday, saying he was uneasy about supporting rate cuts while inflation remains elevated.
Despite the hawkish shift weighing on the rupee, traders noted that the Reserve Bank of India (RBI) continues to actively intervene to prevent the currency from breaching its record low of 88.80.
However, analysts warn that the RBI’s persistent dollar-selling interventions are draining rupee liquidity from the banking system. Deutsche Bank economists expect the central bank to resume open market bond purchases, estimating ₹1.5–2 trillion in OMO buying by March 2026, with additional purchases likely in FY27.
The bank also forecasts a 25-basis-point rate cut by the RBI in December.
