The Indian Rupee opened 13 paise weaker at 85.85 against the US Dollar as tensions between India and Pakistan escalate. On May 8, India intercepted missiles and drones aimed at key military sites. The United States has urged both parties to de-escalate.
The trade range for the day, as per Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, Anil Kumar Bhansali, is 85.50/86.50. "Exporters may now sell, and importers may wait to hedge... The erupted fighting will keep the dollar well bid within a range of 85.50 to 86.50 with Gift Nifty down by about 300 points. Exporters have got a good chance to hedge after importers when the rupee was above 84.50 for a long time," he advised.
On Thursday, the local legal tender had dropped sharply by 89 paise to close at 85.72 after clocking a 19 paise stronger open at 84.64. The currency had declined 39 paise to close at 84.83 against the US dollar on Wednesday.
"While the rupee is likely to remain under pressure in the near term, the moment there is a sign of de-escalation, we may see a rapid reversal as well. Considering that the event is a known unknown, exporters and importers are advised to not overhedge and tread with caution, even considering possible trade and travel disruptions if the situation snowballs into a full-fledged war," said Abhishek Goenka, founder & CEO of India Forex Asset Management at IFA Global.
Brent crude had rebounded past $63 a barrel and was up 0.26% while the US dollar index was trading with minimal change around 9 a.m. on Friday.
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