By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee edged lower in early trading on Friday as bearish sentiment continued to weigh on the currency, though the risk of central bank intervention kept speculators cautious.
The rupee was at 88.7375 as of 10:45 a.m. IST, down slightly from its close at 88.6950 in the previous session. The currency is hovering near its all-time low of 88.80 hit last month.
While strong intervention by the Reserve Bank of India had helped the currency pull back from the brink of 88.80 earlier this month, elevated dollar demand from importer hedging and the maturity of positions in the non-deliverable forwards market has weighed on the currency since.
Pressure also intensified on Thursday after the U.S. Federal Reserve delivered an expected rate cut accompanied by commentary by Chair Jerome Powell that was perceived as hawkish.
On the day, state-run banks were spotted offering dollars intermittently, which helped buffer the rupee against declines, two traders said.
The bias is towards further weakness in the rupee but the RBI will dictate the pace at these levels, one of the traders said.
FX advisory firm IFA Global expects the currency to hover between 88.20-89.20 over the next 6 weeks, describing its view as “moderately bearish” in a Friday note.
Asian currencies, meanwhile, were slightly higher on the day while the dollar index was little changed at 99.4 after rising 0.3% in the previous session.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50 were down about 0.2% each on the day. Foreign investors have turned net buyers of Indian equities this month with stocks logging an inflow of nearly $2 billion.
(Reporting by Jaspreet Kalra; Editing by Ronojoy Mazumdar)
