Rupee Weakens At Open Against US Dollar On Rising Oil Prices

The Indian rupee opened weaker against the US dollar on Wednesday, continuing its decline from the previous day.

The domestic currency started 7 paise weaker at 85.27 against the US dollar on Wednesday, following its close at 85.20 per dollar on Tuesday.

On Tuesday the rupee snapped a five-day winning streak, as rising crude oil prices and a recovery in the dollar index weighed on sentiment.

The anticipated trading range for the rupee is between 85.00 and 85.50. Exporters may wait to sell, while importers might hedge payables around the 85.00 level, according to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

Brent oil prices rose to $67.79 per barrel, nearly 1% higher, extending the previous day's gains. Investors are weighing a fresh round of sanctions against Iran and a drop in US crude stocks, as per Bhansali.

Additionally, a softer tone from US President Donald Trump on the Federal Reserve helped markets recover. Trump backed off from threats to fire Fed Chair Jerome Powell and signalled the possibility of lower tariffs against China. This led to a rise in the dollar index to 99.14, while the US 10-year Treasury yield slightly decreased to 4.3450%. All three major US indices gained more than 2.5% following Trump's comments, he further added.

The dollar rose against the yen to 141.90, while the euro and the pound were lower at 1.1403 and 1.3307, respectively.

Bhansali said the dollar was trading near three-year lows against major currencies as investors were concerned about trade tensions and Trump's attacks on the Fed. The US Trade Secretary suggested a possible de-escalation in US-China trade tensions, which could lead to substantial tariff reductions.

Asian markets showed positive trends, with the Nikkei up 1.81%, Hang Seng up 1.90%, and China up 0.11%. Gift Nifty futures indicated a 60-point uptick. Among Asian currencies, the Chinese yuan was stable at 7.3066, the Indonesian rupiah at 16,879, and the South Korean won at 1,429, following Trump's step back.