The 1-month non-deliverable forward indicated the rupee will open in the 90.22-90.28 range versus the U.S. dollar, having dropped 0.16% on Friday to settle at 90.1625.
The rupee was unable to make headway last week despite two interventions on different days by the Reserve Bank of India that were aimed at pushing the currency higher. Bankers said the central bank stepped up to break the momentum in speculative long dollar positions that had built up amid USD/INR drifting higher.
However, equity outflows, importer hedging and the dollar’s broad strength diluted the impact of the intervention, keeping the rupee under pressure.
The currency staged a rally to 89.75 in the wake of the intervention, which fizzled out.
“What we saw last week really underscores the kind of pressure it (the rupee) is under right now,” a currency trader at a foreign bank said.
“More likely than not, we test 90.50 this week, and I doubt the RBI will repeat the kind of intervention it carried out last week.” The rupee faces added uncertainty from concerns over the Fed’s independence after U.S. prosecutors opened a criminal investigation into Powell.
The Fed chairman accused the administration of using legal threats to influence policy.
The investigation comes against the backdrop of long-running tensions between Powell and Trump over the president’s repeated calls for lower interest rates.
The Trump-Powell clash overshadowed the U.S. jobs report, which was released on Friday. While the U.S. economy added fewer jobs than expected in December, the data did little to alter expectations around the Fed’s rate-cut path.
KEY INDICATORS:
** Dollar index down at 98.95
** Brent crude futures up 0.1% at $63.4 per barrel
** Ten-year U.S. note yield at 4.17% ** As per NSDL data, foreign investors sold a net $412.7mln worth of Indian shares on Jan. 8
** NSDL data shows foreign investors bought a net $72.7mln worth of Indian bonds on Jan. 8
