MUMBAI: The Indian rupee was trading little changed to the dollar on Friday, unable to hold on to its opening advance fuelled by the risk-on mood in Asia.

The rupee was trading at 82.3400 by 0506 GMT, barely changed from 82.3450 in the previous session.

The local unit opened at 82.2850 and reached a high of 82.1450, making it the third time in the last few sessions that the rupee has been unable to breach the 82.15 level.

It is “very difficult” to see how the rupee can manage any major sustainable recovery, a trader at a private sector bank said.

The external risks, the US Federal Reserve outlook and oil all point to more losses for the rupee, the trader said.

Indian rupee may inch higher ahead of US inflation data

The Reserve Bank of India will likely continue to intervene to slow the pace of rupee’s depreciation.

“The RBI’s strategy is likely to help in anchoring expectations and internalising the new normal for the rupee, which is likely to be between 82-83 levels for Q4 2022,” economists at HDFC Bank said in a note.

However, if things took a turn for the worse, a move towards the 84 levels is on the table, HDFC Bank’s Abheek Barua said.

“While the RBI might intervene to make the journey to 84 hard, it is unlikely to protect a particular level even in this scenario.”

Indian equities jumped on Friday, tracking a broad rally in Asian shares despite the US inflation data making it almost certain that the Fed would raise rates by 75 basis points next month.

Asian currencies, however, were moderately lower. The dollar index dipped slightly, while shorter-maturing Treasury yields were flat after Thursday’s surge.

Rupee forward premiums dropped, tracking Treasury yields.