The rupee reversed early gains to weaken to above 79 per dollar after the Reserve Bank of India painted a grim picture on inflation and responded with a 50 basis points hike to its key lending rate to the highest since 2019 and for a third time in a row.
Bloomberg quoted the rupee last at 79.10 against the greenback, after opening with a sharp gain of 50 paise from its previous close of 79.4713.
That even as the dollar struggled to gain a footing on Friday after falling by its sharpest pace in two weeks, as investors remained on tenterhooks ahead of the widely anticipated US jobs data and amid growing worries about a recession.
The US dollar index, which measures the greenback against a basket of currencies, fell 0.68 per cent overnight, the largest fall since July 19, and last traded 105.79.
Investors await the key U.S. nonfarm payrolls report due at 1230 GMT, which will provide hints of how the U.S. economy is faring. Economists expect an increase of 250,000 jobs for the month of July, after 372,000 were added in June.
“Payrolls just clearly seems to be on everyone’s mind for tonight, so I think that’s keeping things relatively subdued,” Ray Attrill, head of FX strategy at National Australia Bank, told Reuters.