Indian rupee to hold near 95.50; RBI blunts flow-driven pressure before Warsh speech

Traders expect the Indian rupee to begin Friday with little movement, quoted between 95.50 and 95.55 per US dollar, according to Business Recorder. The currency closed Thursday at 95.54 and has ranged from 95.40 to 95.75 so far this week, much like the pattern of the previous week. Dealers describe the market as balanced between steady dollar demand from importers and continued support from the central bank.

A bank trader described the rupee as having reached a temporary balance, while interbank views now center on a broader 95.00 to 96.00 band. Bankers noted that crude hovering around $90 a barrel has been mostly digested by traders. Intervention from the Reserve Bank of India is seen making any move above 96.00 hard to achieve, and importers would likely add hedges should the rupee slide toward 95.00.

Attention now turns to a debut speech by Fed Chair Kevin Warsh in Jackson Hole, Wyoming, which traders hope will shed light on his approach to monetary policy and inflation. ANZ Bank said Warsh is unlikely to give forward guidance, but offering too little could still prompt an adverse market reaction given recent rate volatility. Traders will also track the one-day swap cost, dollar demand at the RBI reference rate and forward premiums.