18-07-2025
Pause in dollar rally offers relief to rupee after 86 breach
MUMBAI, July 18 (Reuters) - The Indian rupee is set to open higher on Friday, tracking a broader recovery in Asian peers and supported by a pause in the U.S. dollar index's near-term uptrend.
The 1-month non-deliverable forward indicated an open in the 86.00-86.02 range versus 86.0750 on Thursday, marking the rupee's first sub-86 finish in nearly a month.
"Asia will help (the rupee) at the open. However, I'd fade any downside (on USD/INR)," a currency trader at a bank said.
"Positioning and risk-reward favour upside, and this looks (like a) buy-on-dips market right now."
The dollar index fell about 0.2% in Asia to 98.40, helping most Asian currencies climb higher.
The dollar index had rallied on Thursday, approaching the 99 mark, after robust U.S. data spurred expectations that the Federal Reserve will be in no rush to resume rate cuts.
Upbeat U.S. retail sales in June pointed to a pickup in economic activity, while job claims fell to a three-month low, reinforcing signs of steady labour market strength.
U.S. economic data released on Thursday "continues to signal resilience," MUFG Bank said, while noting the muted reaction in U.S. Treasury yields.
Markets were largely unchanged about the Fed outlook, with no major shift in pricing for a September rate cut or the cumulative rate cuts expected in 2025.
Despite the dip in the dollar index on Friday, the gauge is up 0.6% this week after last week's near 1% rally.
Markets continue to hold net short positions on the U.S. dollar, and an unwinding of those short dollar positions could provide support for the U.S. currency, MUFG Bank noted.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 86.08; onshore one-month forward premium at 10 paise
** Dollar index down at 98.41
** Brent crude futures down 0.1% at $69.5 per barrel
** Ten-year U.S. note yield at 4.44
** As per NSDL data, foreign investors sold a net $121.3 million worth of Indian shares on July 16
** NSDL data shows foreign investors bought a net $3.5 million worth of Indian bonds on July 16
