CURRENCY OVERVIEW

The Rupee  opened weaker at Friday's open after patchy holiday flows and losses in the non-deliverable market drove it beyond the 91-per-dollar level. With Mumbai, the primary hub for rupee trading, shut for a holiday on Thursday, trading was confined to other domestic centres and offshore desks. The local currency's slide past the 91 mark was sizeable as it occurred in holiday-thinned trade, a setting in which big moves are relatively uncommon, bankers said. One banker pointed to sustained pressure on the rupee in the non-deliverable forwards, while highlighting that a large public sector bank was aggressively buying dollars. With liquidity far from optimal due to the Mumbai holiday, the flows had an outsized impact, exaggerating the move in the currency. The dollar was poised on Friday to cap its strongest weekly performance since October, buoyed by a run of better-than-expected economic data, a more hawkish Federal Reserve outlook and as tensions between the U.S. and Iran kept markets on edge. Overnight, the greenback got an added lift after data showed the number of Americans filing new applications for unemployment benefits fell more than expected last week, underscoring labour market stability. It clung to gains in early Asia trade on Friday and left sterling languishing near a one-month low at $1.3457. It was headed for a weekly drop of nearly 1.5%. The euro was similarly down a touch 0.02% at $1.1768 and set to lose 0.8% for the week, with the common currency also weighed down by uncertainty over European Central Bank President Christine Lagarde's tenure. Against a basket of currencies, the dollar hovered near Thursday's one-month peak and was last at 97.89. It was on track for a weekly gain of more than 1%, which would mark its strongest performance in more than four months. The focus for markets now turns to the release of the U.S. core PCE price index and advance fourth quarter GDP figures later in the day, which could drive the next move in currencies. Investors continue to price in roughly two Fed rate cuts this year, though expectations for such a move in June have dipped to a roughly 58% chance from 62% a week ago, according to the CME FedWatch tool. Elsewhere, the Australian dollar was down 0.08% at $0.7055 but set to lose just 0.2% for the week, as it continues to be buoyed by hawkish rate expectations at home. The New Zealand dollar was in a bit more of a bother, headed for a 1.2% weekly loss, undone by a dovish outlook on rates from the Reserve Bank of New Zealand. Investors wagering on tighter policy were badly wrongfooted, following a blizzard of cuts over the past year or so. The kiwi last traded 0.12% lower at $0.5967. In Japan, the yen dipped 0.05% to 155.08 per dollar, reversing slight gains from earlier in the session after data on Friday showed the country's annual core consumer inflation hit 2.0% in January, marking the slowest pace in two years. Oil prices were higher on Friday as concern of conflict betweenn the U.S. and Iran ratcheted up, with Washington saying Tehran will suffer if it does not agree a deal about its nuclear activity within a matter of days. Brent crude futures rose 21 cents, or 0.3%, to $71.87, while U.S. West Texas Intermediate crude gained 23 cents, or 0.4% to $66.66.

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The rupee closed modestly weaker on Wednesday as dollar demand from local corporates and on account of maturing positions in the non-deliverable forward (NDF) market blunted positive cues from gains in most regional peers. The rupee ended at 89.7850 per U.S. dollar, down about 0.1% on the day. Most Asian currencies edged higher but traders said local flow dynamics continued to dominate price action for the rupee, even though it has bounced back from the record-low levels hit last week. The maturity of positions in the NDF market also spurred dollar-buy bids at the daily reference rate, a trader at a Mumbai-based bank said. While price-action in the spot market was largely contained, dollar-rupee forward premiums declined sharply after the Reserve Bank of India announced it will conduct a 3-year $10 billion FX swap next month. The 1-month dollar rupee forward premium fell nearly 15 paisa and the 3-year forward premium was down over 50 paisa. The Japanese yen gained modestly against the U.S. dollar on Wednesday as traders focused on whether weakness in the Japanese currency will prompt officials in the country to intervene. Volumes are light ahead of Thursday’s Christmas Day holiday, when U.S. and many international markets will be closed. The Japanese currency was last up 0.25% on the day against the U.S. dollar at 155.84 per dollar. The dollar reached 157.77 yen on Friday. The dollar was otherwise mixed. The dollar index , which measures it against a basket of other currencies, including the yen and the euro, rose 0.07% to 97.96, with the euro down 0.14% at $1.1778. Sterling weakened 0.13% to $1.3498. The Australian dollar strengthened 0.07% to $0.6705 and the Canadian dollar gained 0.11% to C$1.367 per U.S. dollar. The U.S. currency has fallen this year as the Federal Reserve cuts rates, with more easing expected next year while analysts expect other central banks to have completed their rate reductions. Oil settled marginally lower on Wednesday, and prices were on course for their steepest annual decline since 2020 as investors weighed U.S. economic growth and assessed the risk of supply disruptions from Venezuela and Russia. Brent crude futures closed down 14 cents, or 0.2%, at $62.24 a barrel, while U.S. West Texas Intermediate crude eased 3 cents, or 0.05%, to $58.29

The rupee closed weaker on Friday , pressured by dollar demand linked to maturing non-deliverable forward positions and corporate hedging as global markets awaited a key U.S. Supreme Court ruling on trade tariffs. The currency closed at 90.1625 against the U.S. dollar, down 0.1% on the day but little changed week-on-week. Traders pointed to heightened dollar demand at the central bank's daily reference rate and hedging activity from companies, which weighed on the local unit on Friday. State-run banks were intermittently spotted offering dollars near the day's low for the rupee, which helped limit its losses, two traders said. The central bank stepped in firmly to shore up the currency earlier in the week, but traders said the rupee remains vulnerable without progress in U.S.-India trade talks, or a reversal in portfolio outflows. The dollar gained on Friday after data showed slower than expected U.S. jobs growth, suggesting the Federal Reserve could leave interest rates unchanged later this month. The dollar rose marginally across peer currencies as the data before paring those gains. The greenback was up 0.72% to 158 against the Japanese yen and was up 0.25% to 0.801 against the Swiss franc . The euro was down 0.22% against the dollar at $1.1633. The dollar index rose 0.27% to 99.14. Oil prices rose on Friday on concerns about potential disruption to Iran's output and uncertainty about supply from Venezuela. Brent futures were up 50 cents, or 0.8%, to $62.49 per barrel at 1359 GMT, while U.S. West Texas Intermediate (WTI) crude was up 51 cents, or 0.9%, to $58.27.