The rupee closes almost flat, with a modest depreciation bias remaining

The Indian rupee was little changed on Friday as pressure from weak local stocks and increased interbank demand for dollars accompanied a likely central bank intervention to defend the currency, traders said.The rupee closed at 90.6350 per dollar, down marginally from the closing rate of 90.59 in the previous session. ⁠The currency changed little week after week.

The maturity of positions in the non-deliverable futures market added pressure to the rupee on Friday, adding to a risky mood in global equities, weighed down by lingering concerns over the impact of artificial intelligence and shrinking margins in the technology sector.MSCI’s broadest index of Asia-Pacific shares fell more than 1% against India’s stock index, the Nifty 50, which also fell by a similar amount.

Regional currencies also tended to be weaker, keeping the rupee under pressure.

The rupee “is back to its familiar pattern of steadily falling as interventions contain moves,” said a trader at a Mumbai-based bank.

The currency’s relief from the US-India trade deal has partly faded as demand for corporate dollars remained firm and some foreign investors remained cautious about a recovery in Indian stock and bond yields. Concerns about large government bonds and weak demand pushed bond yields higher, while equities lagged behind the region in the absence of clear AI bets.

“Right now, North Asian markets such as China, Hong Kong, (South) Korea and Taiwan appear superior to India from an earnings growth, valuation and dividend yield perspective,” said Sat Duhra, portfolio manager at Henderson Far East Income.

In the near term, investors will focus on US inflation data due later in the day, which is expected to influence expectations for the Federal Reserve’s interest rate outlook.