The Indian rupee opened 11 paise stronger at 85.51 against the US dollar on Wednesday, in comparison to its previous close of 85.62 on Tuesday. This comes amid various global and domestic economic factors influencing the currency markets.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, provided insights into the day's trading range and hedging strategies. According to him, the rupee is expected to trade in a range of 85.40 to 85.90.
"There is not much to be said in respect of inflows or other outflows in the coming days. "The rupee remains in the broad range of 85-86 and the narrow range of 85.25-85.75," said Bhansali.
He advised exporters need to hedge near 85.95 and importers to wait for hedging purposes.
Additionally, the US dollar was steady at 99.14 after the US and China agreed on a framework for a trade agreement that investors hoped could potentially pave the way to resolving a damaging trade war between the world's two largest economies.
The euro was at 1.1414; the pound was lower at 1.3482. Amongst Asian currencies, the Chinese Yuan was steady at 7.1868, the Indonesian Rupiah at 16,272 and the South Korean Won at 1,670.
On the other hand, negotiations for the India-US Bilateral Trade Agreement have hit a roadblock. US negotiators are demanding India open up sensitive sectors like dairy, agriculture, medical devices, and digital services in exchange for removing Trump-era tariffs on Indian goods, added Bhansali.
This "take-it-or-leave-it" stance is seen by India as a breach of their agreed "mutually beneficial" approach, especially given concerns over rural livelihoods and food security.
On Wednesday, crude fell with Brent crude – the global benchmark for crude oil – falling 0.39% to $66.61 as traders digested an initial agreement between the US and China. This comes after Brent rose above $66 on Tuesday.
In the last two months crude prices have tumbled to a four-year low amid US President Donald Trump's tariff wars. While it may have recovered some of the losses, it still remains almost 9% lower this year as trade conflicts persist and OPEC+ has changed its strategy and abandoned the earlier strategy of defending higher prices by curbing output.
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