Stock indian rupee
Importers are asked to keep a stop loss of 83.05 for their payables. Image Credit: Reuters

Mumbai: The Indian rupee is expected to open lower against the US dollar on Friday after robust US data signalled that the Federal Reserve was likely to keep interest rates higher for longer.

The rupee is projected to open at around 82.85 per dollar, down from 82.7625 in the previous session.

The “obvious pressing” question will be whether we, once again, will see public sector banks on offer (on USD/INR) at around the 82.85-82.90 levels, a trader at a Mumbai-based bank said.

The pair has been struggling to overcome that narrow range in recent days, prompting speculation that the Reserve Bank of India (RBI) does not want the rupee to fall below 83.

Exporters are advised to “wait and watch for RBI action” after the rupee’s weaker opening, while importers should keep a stop loss of 83.05 for their payables, said Anil Bhansali, head of treasury at Finrex Treasury Advisors.

Treasury yields and the dollar index climbed and US equities declined after third-quarter US GDP was revised higher and US initial jobless claims rose less than expected.

The upbeat data bought into question whether the markets have been too optimistic in pricing in rate cuts by the Fed later next year. Futures are expecting US rates to peak at below 5 per cent around the middle of next year before moving lower.

In contrast, Fed officials have indicated no rate cuts next year and a higher terminal rate. The GDP data could veer the markets nearer to the Fed view.

The Korean won led Asian currencies lower, while equity markets in Japan and Australia were down about 1 per cent each.

More US data is on the way Friday with November personal income and spending numbers on tap. The core Personal Consumption Expenditures (PCE) index, the Fed’s preferred measure of inflation, for the same month is expected to rise 4.7 per cent year-on-year.