UAE: Indian rupee inches higher against dirham in early trade

The rupee appreciated by 9 paise to 82.61 against the US dollar (22.50 against the UAE Dirham) in early trade on Friday, tracking cues from positive domestic equity markets on the back of robust macroeconomic data.

However, outflow of foreign funds and crude prices hovering around USD 87 (23.7 against the UAE Dirham) per barrel weighed on the domestic unit, according to forex traders.

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As per the government data released on Thursday, India recorded GDP growth of 7.8 per cent during the April-June period of 2023-24, the highest in the past four quarters, retaining its position as the world's fastest-growing major economy.

"The GDP data for Q2 confirms a resilient first half of the year for India's economy in the face of the RBI's policy tightening," Capital Economics said in a note.

The rupee in each session this week has opened higher but has been unable to sustain it. A similar outcome is expected on Friday.

The rupee is likely to weaken during the day, a foreign exchange trader at a state-run bank said.

"Expect it to be range-bound till a major event pushes it beyond 83."

The offshore yuan climbed to a high of 7.2392 to the dollar after China's central bank said it would cut the level of foreign exchange reserves that financial institutions must hold, a step directed towards slowing the pace of the recent yuan depreciation.

The offshore yuan around mid-August had dropped to 7.35. China's factory activity surprisingly returned to expansion in August, further contributing to the yuan's move higher.

"The GDP data for Q2 confirms a resilient first half of the year for India's economy in the face of the RBI's policy tightening," Capital Economics said in a note.

"More timely data point to a slight cooling in growth but India will remain an outperformer."

Focus now turns to the important US monthly jobs report due later in the day. On Thursday, the reading on the US personal consumption expenditures (PCE) price index, both headline and core, was in line with expectations.

(PTI, Rueters)

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