The Indian rupee opened 20 paise stronger against the US dollar at Rs 85.50, compared to its closing rate of Rs 85.70 per dollar on Thursday.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP said rupee's expected range for the day is between Rs 85.35 and Rs 86. Exporters are likely to sit tight, while importers may start hedging for the near term, according to him.
Brent oil prices rose slightly in Asia due to resilience in US demand, but are on track for weekly losses. Brent crude was priced at $67.09 per barrel after reaching $81 last week, following US military action in Iran.
"The prices took some support from the US inventory drawdown and China talks of stimulus. Brent was down over 12% during the week as Trump also indicated that Iran could continue selling to China and that talks over the nuclear issue with Iran will be held next week," Bhansali explained.
The US dollar remained soft at 97.27, slightly up from its recent low below 97, while the US 10-year Treasury yield softened to 4.25%.
Bhansali highlighted growing speculation about a potential Federal Reserve rate cut in July, with markets pricing in 64 basis points of cuts compared to 46 basis points last week. "The dollar continued its journey, remaining near 3-1/2 years low against the Euro and Sterling and must be hugely oversold," he added.
"Inflows dominated outflows yesterday, taking the rupee up by 38 paise. We expect the same today, though there could be outflows from oil, RBI buying, and FPI buying dollars. One outflow of JSW Paints buying Akzo Nobel could also be there to the tune of $1 billion," said Bhansali.
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