Rupee Set for Stronger Open as Weaker Dollar, Softer Oil Prices Lift Sentiment

The Indian rupee is poised to strengthen at Friday's open, boosted by the dollar's biggest slide in three months ?and a modest pullback in oil prices, while the expectation ‌of continued intervention from the central bank keeps it supported.

In the NDF market, the Indian rupee is trading at 95.40-95.45 range, after closing 95.68 on Thursday.

The Indian rupee, up 0.9% this week, is on track to record its strongest weekly performance in four months, supported by sustained intervention from the Reserve Bank of India. After aggressively stepping into the foreign exchange market last Friday, the central bank has continued to underpin the currency through the week.

The Indian rupee has outperformed its oil-sensitive Asian peers this week, including the Indonesian rupiah and the Philippine peso, largely supported by sustained intervention from the Reserve Bank of India.

Oil prices have remained volatile amid renewed geopolitical tensions between the United States and Iran. Crude extended its decline during Asian trading as investors evaluated plans for a Saudi Arabia-led maritime coalition aimed at enhancing security cooperation in the Red Sea.

The Indian rupee is expected to draw support from a weaker US dollar, which has come under pressure amid suspected yen-supporting intervention and a steeper US Treasury yield curve following comments by Federal Reserve Chair Kevin Warsh that raised concerns about the Fed's commitment to containing inflation.

Indian equities are expected to open higher on Friday, supported by gains across Asian markets and renewed foreign institutional inflows, which have strengthened sentiment toward domestic stocks.

GIFT Nifty futures were trading at 24,420.5, indicating the benchmark Nifty 50 is likely to open higher than Thursday's close of 24,317.15.

Foreign institutional investors (FIIs) were net buyers of Indian equities on Thursday, purchasing shares worth $378.76 million, according to provisional data. They have invested nearly $864 million in Indian equities over the past two trading sessions, taking total inflows for July to approximately $1.6 billion.