MUMBAI, Nov 18 (Reuters) – The Indian rupee was little moved on Friday as the benefit of falling oil prices was countered by continued business demand for the dollar.
The rupee was at 81.6650 to the dollar, against its previous close of 81.65. The currency is down 1% in volatile trading so far this week, giving up half of its gains from last week following slightly weak US inflation data.
There is persistent demand for dollars from oil importers and other businesses, traders said.
“Any drop in USD/INR is redeemed this week,” said Ritesh Agarwal, head of treasury at CTBC Bank.
When the pair fell near 80.5 on Monday, it became extremely attractive for importers to start hedging after being in a loss position for some time, Agarwal added.
He expects the rupiah to weaken to 82 as early as next week. The rupee last traded in the 80 handful in mid-September.
Asian currencies were mostly higher, with the onshore yuan rising thanks to a firmer midterm fixation by China’s central bank, while regional equities climbed.
Brent crude futures plunged more than 3% overnight to slip below $90 a barrel on demand concerns amid rising COVID-19 cases in China and fears of more aggressive US interest rate hikes. Oil was flat at $90.4 at the start of Asian trading.
Lower crude prices bode well not only for India, but also for most countries in Asia, as the majority of them are oil-importing countries.
The dollar index eased a little, after earlier receiving support from another Fed official who dampened investor expectations for a pause in rate hikes.
US bond yields also firmed as St Louis Fed President James Bullard said that even on dovish assumptions, the funds rate must rise to at least 5-5.25% to reduce inflation. inflation from 3.75% to 4% currently.
Reporting by Anushka Trivedi in Mumbai; Editing by Savio D’Souza
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