By Dharamraj Dhutia and Nimesh Vora
MUMBAI (Reuters) – The Indian rupee weakened against the U.S. dollar on Friday, tracking losses in other Asian currencies, while concerns over hefty U.S. tariffs on local goods continued to weigh on sentiment.
The currency’s decline was capped by expectations that the Reserve Bank of India (RBI) would intervene near current levels, traders said.
The rupee was at 87.8000 to the U.S. dollar at 11:10 a.m. IST, down from 87.6250 on Thursday.
The first level that the market will expect the RBI to intervene in is 87.80 – Tuesday’s high on the dollar/rupee – and after that “it will all be about” the all-time high of 87.95, a currency trader at a Mumbai-based bank said.
He added that importer hedging, equity outflows and speculative flows were pressuring the rupee. Foreign investors have pulled out more than $1 billion from Indian equities over the last two sessions.
Weakness in Asian currencies also weighed on the rupee. Its regional peers were down 0.2%–0.7% ahead of the release of the U.S. personal consumption expenditures (PCE) data later in the day.
The core PCE index, the Federal Reserve’s preferred gauge of inflation, will help determine how many rate cuts the central bank delivers this year.
Traders are currently pricing in an 86% chance of a September reduction.
(Reporting by Dharamraj Dhutia; Editing by Sonia Cheema)
