India, Sep 18 : The Indian rupee is expected to open slightly stronger against the U.S. dollar on Friday, supported by easing crude oil prices and expectations of foreign investment inflows linked to the National Stock Exchange’s $2.3 billion initial public offering.
The rupee closed at 95.93 per dollar on Thursday and was expected to begin Friday’s session around 95.75-95.80, according to market participants. Despite the anticipated improvement, the currency remained on course for a weekly decline.
Oil prices provided some relief after Brent crude extended its recent losses. Brent was trading around $104.10 a barrel, down 0.7%, as investors assessed developments affecting Middle East supply and the possibility of additional crude reaching international markets through alternative routes.
Foreign institutional inflows associated with the NSE offering could also provide support for the rupee. The IPO, one of India’s largest on record, closes for subscription on September 21 and is expected to attract significant participation from overseas investors.
However, analysts said the currency continues to face pressure from elevated energy costs and seasonal deterioration in India’s current account position. Strong dollar demand from domestic importers could also limit any sustained recovery.
BofA Global Research said oil prices at $80 a barrel or higher, combined with seasonal current-account pressures, remained important risks for the Indian currency. Consistent capital inflows or support from the Reserve Bank of India could be required to keep the dollar-rupee exchange rate within a relatively stable range.
Broader Asian currency markets were mostly firmer on Friday, while regional equities also gained. Investors were simultaneously monitoring major central-bank decisions, including the Bank of Japan’s expected rate increase and recent policy moves by the U.S. Federal Reserve and Bank of England.
The rupee’s near-term direction is therefore likely to depend on a combination of crude prices, foreign portfolio flows, importer demand and global monetary-policy developments.