The dollar's surge against the Indian rupee took a breather on Friday after
hitting record highs for most of the week, although upbeat manufacturing data from around the world helped the greenback against the yen.
However, traders remain on edge - particularly in emerging markets - about the US Federal Reserve's stimulus programme after minutes from the bank's July meeting failed to clarify its future.
The Indian rupee, which tumbled to another record low of 65.56 to the dollar on Thursday, was changing hands at 64.45 in Friday afternoon trade.
India's finance minister and central bank governor both tried to calm
investors Thursday by reiterating that New Delhi does not plan to introduce capital controls, a fear that had weighed on the unit earlier this week.
Kamal Vachani, Director, Al Maya Group and Regional Director, Electronics and Computer Software Export Promotion Council (ESC), said, "The Indian government must take steps to prevent the slide. NRIs are now sending money slowly as they are watching the situation and feel that rupee will slide more in the coming days to take further advantage of depreciation of rupee.
"The exports of 100 per cent Indian merchandise are growing in case there is no imports involved in that product. However imports into the country are getting costlier due to depreciation of the rupee. This will also make the retail in India costlier. Foreign investors will be cautious in investing in India till the air is cleared."
Meanwhile, on Thursday a preliminary purchasing managers index (PMI) of manufacturing activity in the eurozone hit a 26-month high, while a reading in the United States also showed improvement. Earlier in the day HSBC said its PMI for China had also shown growth for the first time in four months.
Wall Street also provided a positive lead. The Dow rose 0.44 percent, the S&P 500 added 0.86 percent and the the Nasdaq jumped 1.08 percent. The rises came despite an unexplained glitch that shut down trading on the Nasdaq for about three hours, which interrupted business on other markets.