Rupee weakens slightly

The Indian rupee weakened slightly on Friday, weighed by crude marking fresh year-to-date highs but the downside was likely capped by dollar selling orders and expected equity inflows.

The rupee was 83.07 against the US dollar as of 11:00 am IST, compared with 83.03 in the previous session. Asian currencies were mostly weaker.

"We may see a 20 paisa range today, and the rupee is unlikely to weaken beyond 83.10-83.20," a foreign exchange trader at a public sector bank said, flagging that USD/INR could face selling pressure at the current levels.

Brent crude futures marked a fresh year-to-date high at $94.63 on Friday following better-than-expected economic data from China. The dollar index was softer in Asia after hitting a six-month high on Thursday.

India's equity indexes, the BSE Sensex and the Nifty 50, hit fresh highs on Friday. Traders expect equity inflows of about $500-$550 million, following a FTSE index rejig.

Meanwhile, analysts say the Reserve Bank of India should loosen control on the rupee.

The RBI should allow the rupee to weaken below 83.30 after the upcoming US Federal Reserve meeting, Arnob Biswas, head FX research at SMC Global Securities, said. The rupee hit a record low of 83.29 in October 2022.

The Fed will announce its policy decision on September 20, when it is widely expected to keep interest rates unchanged.