New Delhi: The Indian rupee traded largely unchanged on Friday, as traders and investors kept a close watch on global economic cues ahead of the release of the much-anticipated U.S. jobs report. The local currency hovered at around ₹88.1650 against the U.S. dollar in early trade, only a shade weaker than Thursday’s close of ₹88.1450. Market participants suggested that while the overall global setup was mildly favorable for the rupee, the lack of strong domestic inflows capped any significant gains.
A major factor underpinning the rupee’s stability was the retreat in the U.S. dollar across Asian markets. The greenback softened as the yield on the two-year U.S. Treasury dropped to 3.59 percent, its lowest point in four months. This reinforced market expectations that the Federal Reserve will move forward with a 25-basis-point rate cut later this month, a move that could ease pressure on emerging market currencies like the rupee.
However, optimism was tempered by caution. A trader at a state-owned bank said that even if U.S. labor market data shows a downside surprise, thereby weakening the dollar temporarily, the rupee’s rally is unlikely to sustain without stronger equity inflows into India. Moreover, the steep tariffs of up to 50 percent imposed by Washington on Indian exports remain a heavy drag on sentiment.
Currency analysts stressed that while falling U.S. yields should, in theory, support emerging market currencies, the rupee’s outlook is tied to structural challenges. Japanese financial giant MUFG suggested that unless trade tensions ease and capital inflows pick up, the rupee may face gradual depreciation, potentially slipping towards the ₹89 mark in early 2026.
For now, the market’s focus remains firmly on the U.S. non-farm payrolls data, which is widely seen as a key determinant of the Federal Reserve’s near-term policy stance. A weaker-than-expected jobs number could prompt a sharper sell-off in the dollar, offering the rupee brief breathing space. But absent meaningful domestic support or external relief from trade restrictions, India’s currency is likely to remain range-bound in the near future.