MUMBAI: The Indian rupee is likely to open weaker on Friday after oil prices and the dollar index climbed to multi-month highs, possibly leading the central bank to intervene.

Non-deliverable forwards (NDFs) indicate rupee will open at around 83.06-83.08 to the US dollar compared with the close of 83.03 in the previous session.

“Considering oil and dollar, we definitely would have been much higher (on USD/INR) if the central bank was not a factor,” a forex trader at a bank said,

“The central bank’s resolve to keep the pair from making a record high will be put to the test again in the coming days.”

The last time the rupee was at risk of falling below the record low of 83.29, the Reserve Bank of India intervened, both in the NDF and the onshore over-the-counter markets.

Brent crude futures spiked to a fresh year-to-date high on Friday to near $94.30 per barrel on supply worries and after China moved to cut banks’ cash reserve requirements to boost its economic recovery.

India rupee to not react much to above expectations US inflation

Local oil companies have been actively buying dollars through the week and the demand is likely to continue all through this month, a foreign exchange trader at a state-run bank said, signalling persistent pressure on the rupee.

The dollar index rose to a 6-month high of 105.43 on Thursday following better-than-expected US economic data. “The US economy is still refusing to roll over,” ING bank said in a note after data showed that US retail sales rose 0.6% in August, more than the expected 0.2%.

The euro’s slide after the European Central Bank signalled it was likely done with its rate hike cycle contributed to the dollar index’s rally.

Most Asian currencies were down but the offshore Chinese yuan rose after economic data suggested that recent support measures may be starting to stabilise the Chinese economy.