Rupee Opens Higher Against US Dollar Amid Trade Optimism
The domestic currency began the day at 86.47 per dollar, up 4 paise from Friday’s close of 86.52.
The Indian rupee opened stronger against the US dollar on Monday, buoyed by easing global trade tensions and a softer dollar index. The domestic currency began the day at 86.47 per dollar, up 4 paise from Friday’s close of 86.52.
The brief uptick followed by a volatile trade week for rupee can be attributed to anticipation around a potential US-India trade agreement ahead of the August 1 tariff deadline, as well as expectations of increased energy demand following a breakthrough in US-EU trade talks. Brent crude prices edged up to $67.86 per barrel in early Asian trading, reversing a three-week decline.
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, projected the rupee to trade within a range of 85.35 to 85.95 for the day. He advised exporters to hedge near 86.00 and importers to consider positions below 85.50.
Market participants are also closely watching the US Federal Reserve’s two-day policy meeting starting Tuesday, along with key economic indicators including the June PCE inflation index, advance GDP data, and the July jobs report. These events are expected to influence global currency flows and investor sentiment, Bhansali said.
He further added that despite recent volatility, the rupee may find support from expected inflows into Indian government bonds and the NSDL towards month-end, potentially stabilising the currency within the projected range.
"The market sentiment is to remain cautious due to upcoming global events listed above as also the August 1 deadline from Trump on tariffs. FPIs having been making portfolio outflows keeping dollar well bid and further weakness could accelerate it", Bhansali said.
