Rupee Bounces Late as Dollar Inflows Boost Currency Ahead of RBI Deadline
The Indian rupee got a late boost on Friday as dollar inflows increased ahead of the Reserve Bank of India's (RBI) special non-resident deposit window closing on Monday. The currency ended at 95.3775 per US dollar, up 0.2% from the previous day.
The session began with importers buying dollars, pushing the rupee weaker, but deposit-related inflows soon hit the spot market and knocked the dollar/rupee pair lower. This triggered stop-loss orders, forcing traders who had positioned for rupee weakness to unwind quickly, which in turn exaggerated the late-day move.
Traders also flagged flows tied to MSCI's equity index rebalancing due on August 31st and dollar selling by state-run banks as factors contributing to the rupee's movement. Looking ahead, bankers said the RBI's swap facility could help absorb excess dollars once the special deposit window shuts.