The Indian rupee opened little changed against the US dollar on Friday amid an easing oil price, even as a widening trade deficit weighed on the local currency. New economic data that alleviated recessionary fears in the US and led to a global market recovery may support the rupee.
The rupee appreciated one paise to open at Rs 83.94 against the US dollar, according to Bloomberg. It had closed at Rs 83.95 on Wednesday.
"The trade deficit on the domestic front has widened to $23.5 billion, driven by a surge in oil imports and slower export growth. While this scenario exerts some pressure on the rupee, the downside appears to be capped at 84.05," said Amit Pabari, managing director of CR Forex Advisors.
The rupee is expected to trade within a range of Rs 83.80-84.05 against the dollar in the short term, with a bias towards the lower end of the range, he said.
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The US dollar index was down 0.01% at 102.9, and the Brent crude oil price fell 0.22% to $80.87 per barrel as of 9:00 a.m.
Oil prices dipped as the market weighed strong US economic data and the potential for an attack by Iran or its allies on Israel against a subdued demand forecast from China.
A series of US economic reports this week—covering inflation, jobless claims, and retail sales—has provided reassurance to investors, bolstering the view that the US economy might be entering a “Goldilocks” period where inflation remains controlled without compromising growth.
All eyes will be on Jerome Powell’s speech at next week’s Jackson Hole meeting, as the market eagerly awaits insights into the Fed’s economic outlook, according to Pabari.
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