The 1-month non-deliverable forward indicated the rupee will largely remain unchanged from 90.3550 on Thursday. The currency, buoyed by the U.S.-India trade deal, is on track for its best weekly performance in more than three years.
The rupee has repeatedly run into resistance near the 90-per-dollar level amid this trade deal rally, and bankers say the mark is likely to remain a key technical barrier.
“There is buy interest (to buy dollars) at near 90 level, and it looks like a tall order (for the rupee) to push much beyond that,” said a Mumbai-based currency trader.
He added that an underlying risk-off tone and a broadly firm dollar have made it harder for the rupee to strengthen past the level.
Expectations for a status-quo outcome from the Reserve Bank of India’s policy decision are well priced in and unlikely to be a major driver for the currency, the trader said.
The RBI is expected to leave the policy rate unchanged at 5.25%, with 59 of 70 economists in a Reuters poll calling for a hold. The survey predates the U.S.-India trade deal, which has reduced external uncertainty and reinforced expectations that the central bank will maintain its current stance, making a policy surprise unlikely.
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Asian equities extended losses on Friday after a selloff on Wall Street intensified on worries about the enormous cost of the artificial intelligence boom.
The dollar found support from risk-off flows, while U.S. Treasuries rallied after data signalled weakness in the labour market.
