The Indian rupee is expected to open marginally higher on Friday, tracking an uptick in Asian peers on bets of a Federal Reserve pivot as early as next quarter.
Non-deliverable forwards indicate the rupee will open at around 83.12-83.14 to the U.S. dollar compared with 83.1650 in the previous session.
The offshore Chinese yuan climbed to the highest since June to 7.0910 to the dollar, while other Asian currencies rose 0.2% to 0.5%.
Since last month, Asian currencies have been propped up on expectations that slowing inflation will allow the Fed to cut rates several times next year.
The Korean won and the Thai baht are up 5% since November, and the offshore yuan has climbed more than 3%.
It has been a different story for the rupee, with the currency up about only 0.1% in this period, thanks largely to a central bank that has insisted on a narrow range, according to traders.
“The biggest question for the rupee heading into 2024 is not about flows or the Fed. It’s about the RBI (Reserve Bank of India),” a senior treasury official at a bank said.
“The RBI’s heavy intervention, particularly in the latter half of the year, has implications far beyond (USD/INR) spot.”
On Friday, muted crude oil prices and foreign inflows are likely to offer support to the rupee, Dilip Parmar, a foreign exchange research analyst at HDFC Securities, said.
Brent crude has declined more than 4% over the last three days to slip below USD 77.50 per barrel.
Overseas investors have bought Indian bonds and equities worth USD 9.3 billion in December, the highest monthly tally this year.
