Rupee Opens Lower After Dollar At Two-Decade High; US Jobs Data Eyed

The rupee opened lower on Friday, after the dollar index climbed to its highest level in 20 years, ahead of the critical US jobs report, which could strengthen the Federal Reserve's resolve for an aggressive rate hike path to bring down elevated inflation.

Bloomberg showed the Indian currency was at 79.6613 against the dollar, compared to its previous close of 79.5563.

PTI reported that the domestic currency fells 14 paise to 79.70 against the US dollar in early trade. 

The rupee opened on a weak note as the dollar index advanced to 109.60 with the British pound falling to its lowest in two years while Yen touched the 140-mark, Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, told PTI.

Forex traders said, while oil prices remained subdued, weak Asian and emerging market peers and higher inflation expectation might weigh on the domestic currency.

The rupee on Thursday witnessed a choppy session, trading in a 79.30 to 79.66 range.

Reuters said the Indian currency held its ground on Thursday, as weakening oil prices and exporters selling dollars shielded it from a selloff in global risk assets.

While global equities and currencies tumbled as the dollar index shot up on escalating bets that the Fed would keep rates high, the rupee markedly stood out for not declining as much.

A trader at a Mumbai-based bank told Reuters that the market is "a bit indecisive" on what to do after the rupee managed a "decent enough recovery" from record lows. The bias on the USD/INR pair is now "more neutral" rather than "a buy-on-dips," the trader said.

"With the bias neutral, today's US jobs data and India's trade deficit numbers will be key," added the trader.

On Thursday, the dollar index increased to a touch below the psychologically significant 110 level. The demand for the dollar was boosted by an unexpected drop in US unemployment claims and somewhat better-than-expected manufacturing data.

The US non-farm payroll data is expected to reaffirm more room for the Fed to opt for larger rate increases.

Asian shares and currencies were moderately lower on Friday.

Meanwhile, India's trade deficit numbers will likely be released later in the day. According to calculations by Reuters, based on information from a government source, India's trade deficit in August moderated to $28.68 billion from a record $30 billion in the previous month.