The Indian rupee opened weaker on Friday. The currency weakened by two paise to open at Rs 85.88 against the greenback, according to Bloomberg. It had closed at Rs 85.86 on Thursday.

The rupee had hit a record low of 85.94 against the dollar during the day on Thursday. It had also hit a record low of 85.846 against the dollar after opening at 85.82, on Wednesday.

“…FIIs withdrew Rs 10,587.17 crore yesterday and Rs 28,842 crore this month, reflecting risk aversion. Meanwhile, rising crude prices amplify the strain on India’s current account deficit,” said Amit Pabari, managing director of CR Forex Advisors.

“Indian rupee gained slightly to 85.8475 on flows yesterday, but may not be able to sustain the gains with a stronger dollar index and rising oil prices. Asian currencies were relatively stable as market awaits for the NFPR data today. The ‘buy dollars at dips’ trade continues,” said Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP.

Given these conditions Pabari expects the rupee to trade between 85.70 and 86.30, expecting the volatility to stay elevated before Trump’s inauguration and policy reveals.

While Bhansali expects the rupee to trade in the Rs 85.75 to 85.97 range on Friday, with exporters on the watchful side for hedging. Importers are advised to buy dollar dips or trigger a stop loss of Rs 85.60.

Dollar Index And Crude Oil

The dollar index is 0.04% higher at 109.21. While the Brent crude is up 0.3% at $77.15.

Brent oil was up in early Asian trade to $77.12 per barrel with icy conditions in part of Europe and US driving up fuel demand for heating. “There could be supply disruptions due to tightening sanctions, amid low stockpiles, freezing temperatures and improving sentiment regarding Chinese stimulus measures,” according to Bhansali.

“Globally, the US dollar continues to dominate surging to 109.375, driven by the Federal Reserve’s hawkish stance, as they anticipate slower rate cuts and robust economic data,” noted Pabari.

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