Rupee Opens Stronger Against US Dollar
Rupee's trade range for Tuesday is expected to be between 85.35 and 85.95.
The Indian rupee opened 15 paise stronger against the US dollar at 85.61 on Tuesday, compared to its previous close of 85.76 a dollar on Monday.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said Rupee's trade range for Tuesday could be between 85.35 and 85.95. He advised exporters to hedge near 86.00 and importers to hedge for the near term at 85.50 and below.
Brent oil prices fell to $66.46, reaching pre-Iran-Israel conflict levels, as the market focused on the upcoming OPEC meeting on July 6 to discuss August output. Market sentiment was also affected by concerns over the sweeping US tax cut and spending bill backed by President Trump, which could significantly increase the fiscal deficit and economic risks in the US. The looming deadline of July 9 for trade deals or higher tariffs, as warned by Secretary Bessent, added to the market's anxiety, with countries like Japan and India facing potential tariff hikes of over 20%, potentially causing increased trade disruptions, Bhansali added.
The US dollar index fell to 96.80, and the US 10-year Treasury yield dropped to 4.2160%, reflecting fiscal worries and trade deal uncertainties. Investors are also anticipating a quicker pace of monetary policy easing by the Federal Reserve, ahead of key economic data releases, particularly the Non-Farm Payroll Report due on Friday.
Bhansali noted that the rupee was sold off up to 85.78 on Monday due to constant dollar buying by nationalised banks, possibly on behalf of the RBI and oil companies. Importers also bought dollars to hedge their positions around the 85.50 levels, while exporters took the opportunity to sell at above 85.75 levels for intra-day positions.
He suggested that the day's range of 85.35 to 85.95 seems appropriate, with the HDB Financial oversubscription amount being returned and exports hedging any uptick near 86.00 levels.
Markets are awaiting PMI data from various countries, the NFPR data on Friday, and US President Trump's stance on the July 9 tariff deadline, Bhansali said.
