The Indian rupee weakened on Friday on the back of a broad rally in the dollar versus major currencies, but gains in domestic shares limited a sharp sell-off. The dollar rose against a basket of currencies on Friday, hovering near a 10-month high as debate over whether the Federal Reserve would wind down its asset buying programme later this year gathered pace.
Traders said there was good dollar demand from importers as well, while exporters stepped up sales of the greenback near 54.90-55.00 levels, limiting a very sharp fall. "There is no immediate trigger next week for a sharp depreciation. But a Nifty correction is possible and that may lead to some more bearishness in the rupee," said Samir Lodha, managing director at QuantArt Market Solutions.
The partially convertible rupee closed at 54.88/89 per dollar compared with 54.7750/7850 on Thursday. On the week, the unit fell 0.15 percent. "USD/INR pair to trade in a higher range of 54.00-55.00 in the near term with an upside of 55.30 against our previous expectations of a range of 53.00-54.50," economists at HDFC Bank wrote in a note. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.96 with a total traded volume of $3.90 billion.