The Indian rupee lumbered near a one-month high on Friday, on course to end the week on a quiet note, as likely dollar-selling intervention by the central bank helped to offset the impact of rising oil prices on Middle East jitters.
The rupee was at 95.2650 per dollar as of 10:00 a.m. IST, barely changed from its close at 95.22 in the previous session. It had risen to 94.9175 earlier in the week.
On Friday, the currency appeared vulnerable before local markets opened, but state-run banks' dollar sales, most likely on behalf of the Reserve Bank of India, blunted the pressure from higher oil prices, traders said.
Oil prices rose on Friday amid concerns around the opening of the Strait of Hormuz as Iran, working with Oman, suggested banning vessels deemed hostile from the strait and heavily fining those that violated the proposed rules.
Elevated demand to buy dollars at the central bank's daily reference rate, also called the fix, was another factor dragging the rupee. The daily fix was hovering at 0.70/0.80 paisa premium.
Local stocks slipped, and the benchmark bond yield nudged higher with traders also pointing to general risk aversion heading into the weekend.
Later in the day, the focus will turn to U.S. monthly non-farm payrolls data for cues on the future path of benchmark borrowing costs in the world's largest economy.
Forecasts are centred on a rise of 80,000 jobs for July after a 57,000 gain in June, with the unemployment rate forecast to hold steady at 4.2%.
"With the FOMC leaning hawkish and three of its members having voted for a hike in July, the labour market has become a more critical factor for the Fed’s next policy move," analysts at DBS said in a note.
Markets are pricing a near 60% chance of a hike next month, having added to wagers after a Financial Times report, citing sources close to Federal Reserve Chair Kevin Warsh, pointed to the potential for a September interest rate hike, depending on incoming data.
