Rupee slips; weaker dollar of little help amid importer hedging demand

Reuters

07-03-2025

MUMBAI, March 7 (Reuters) - The Indian rupee weakened slightly on Friday even as the dollar lingered near a four-month low against its major peers with traders saying that importers' hedging requirements and foreign banks' dollar purchases weighed on the local unit.
The rupee was at 87.1475 against the U.S. dollar, down slightly from its close at 87.1150 in the previous session.
Asian currencies were mostly rangebound while the dollar index dipped below 104, hovering close to its weakest level since November.
Concerns about a slowdown in the U.S. economy alongside uncertainty about the growth-inflation impact of trade tariffs have weighed on the U.S. dollar over recent sessions, driving the dollar index down by about 3% this month.
While the rupee has gained slightly on the back of a weaker dollar, it remains a laggard amongst Asian peers due to persistent portfolio outflows from Indian equities and heightened domestic hedging.
Foreign investors have net sold more than $15 billion of local stocks so far in 2025.
An uptick in rupee volatility has also spurred local companies to ramp their short and long tenor hedges, bankers said.
The focus on Friday will be on the U.S. non-farm payrolls report due later in the day which will influence market expectations of rate cuts by the Federal Reserve, and the dollar's trajectory by extension.
Economists polled by Reuters have forecast that the world's largest economy added 160,000 jobs in February while the unemployment rate was unchanged month-on-month at 4%.
Interbank traders on the dollar-rupee pair are positioned for a slight rebound in the U.S. dollar post the data, a trader at a state-run bank said.