By Dharamraj Dhutia and Nimesh Vora
MUMBAI (Reuters) -A pre-open push from the Reserve Bank of India helped the rupee start on a firmer footing on Friday, although importer hedging and a weak tone across Asia tempered the support.
The rupee was last quoted at 87.8550 against the U.S. dollar, having hit an intraday high of 87.75. The currency had briefly weakened past 88.00 mark in pre-open trade ahead of the Indian central bank’s likely U.S. dollar sales through state-run banks.
The rupee has rallied more than 1% in the last two sessions, in what is being seen a deliberate attempt by the RBI to push the currency pair down.
The central bank is estimated to have sold $3 billion to $5 billion in spot and non-deliverable forward markets to support the rupee on Wednesday, marking its largest intervention in months, according to traders.
While the RBI is “showing resolve in backing the rupee, importers are not holding back in their hedges – which is what you would expect at these levels,” a FX salesperson at a private sector bank said.
Meanwhile, Asian currencies were mostly lower on Friday, weighed by tepid risk appetite. Regional units struggled to find support despite a more dovish tilt in the Federal Reserve’s rate outlook.
Futures now imply a small probability that the Fed could cut rates by a cumulative 50 basis points over its next two meetings this year.
Fed Governor Christopher Waller said he supports another rate cut this month, citing mixed signals from the labour market.
(Reporting by Dharamraj Dhutia and Nimesh Vora; Editing by Janane Venkatraman)
