Rupee Opens 16 Paise Weaker Against US Dollar

The Indian rupee opened 16 paise weaker at 86.83 against the US dollar on Monday, marking its lowest level since June 19. The currency had closed at 86.67 on Friday, and traders expect it to trade in a range of 86.50 to 87.00 through the day.

“Exporters are likely to wait and watch, while importers may look to hedge and buy for cash at the day's lowest level,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

Brent crude prices, which rose 2% on Monday to above $70 per barrel following a trade deal between the US and EU, slipped to $69.33 per barrel in early Asia trade. The decline came amid renewed risk aversion across global markets.

“Trump announced he is shortening the deadline to 10–12 days for Russia to end its war in Ukraine or face more sanctions,” Bhansali said.

“Europe is set to give up a huge percentage of everything it gets from Russia, giving US producers a major boost under the new US-EU deal," he added.

Meanwhile, senior US and Chinese officials are meeting in Stockholm to extend their trade truce ahead of the August 12 deadline, adding another layer of uncertainty to global currency markets.

The US dollar surged on trade relief, reversing a month-long slide driven by trade war anxiety. However, Bhansali cautioned that the dollar’s strength may be short-lived.

“Relief for the battered currency is not likely as a potentially less hawkish Federal Reserve is now the main threat,” he said.

The dollar index climbed to 98.62, while the US 10-year yield edged up to 4.40%. Market participants are now focused on the upcoming Fed meeting, with only 16% odds priced in for a rate cut at the September 16 meeting.

“Markets are not braced for fireworks at the July meeting,” Bhansali added.