Soft dollar may give rupee only brief support as outflows continue to weigh

The Indian rupee is likely to open slightly firmer on Friday, aided by a softer U.S. dollar, though traders caution that the improvement may be brief as continued merchant and portfolio outflows maintain pressure on the currency.

In the NDF market, the Indian rupee is trading at 90.27-90.30, after closing at 90.3675 on Thursday.

The rupee fell to a fresh record low of 90.4675 in the previous session, with traders attributing the decline to strong dollar demand from corporates and positional adjustments after the earlier all-time low of 90.42 was breached.

Indian equities are poised to open higher on Friday, building on the rebound seen in the previous session after the Federal Reserve’s rate cut, while investors await domestic inflation data scheduled for release later today.

Gift Nifty futures were at 26,130.5, suggesting that the Nifty 50 is set to open above Thursday’s close of 25,898.55.