The rupee strengthened against the dollar at open on Monday as the greenback index gave up gains in Asia session after data showed that US business activities slumped to a 17-month low. The rupee opened 13 paise higher at 86.58 against the US dollar.
The Indian unit had settled at 86.71 a dollar on Friday.
The dollar index, which measures the greenback against six major currencies, declined as much as 0.41% to 106.17 so far today. The index declined as data showed that US Composite Purchasing Manufacturing Index declined to 50.4 in February from 52.7 in January, marking the lowest level since September 2023, according to Bloomberg.
US business activity slowed on fears of impact of tariff on imports and reduction in federal spending.
"Adding to the pressure on the greenback, the euro received a boost as Germany's conservatives secured an expected election win, improving the region's political stability. Furthermore, stronger eurozone manufacturing PMI data at 46.1 provided additional support to the euro, further weakening the dollar index," said Amit Pabari, Managing Director, CR Forex Advisors. The index was trading 0.39% lower as of 9:03 a.m.
Crude oil prices were flat in Asia session after erasing losses on demand concern. Brent crude was trading flat at $74.43 per barrel as of 9:03 a.m.
Market participants may alter their position in the rupee forwards market ahead of the Reserve Bank of India's $10 billion dollar buy-sell swap, forex traders said.
"Exporters may sell the cash dollars requirement on all upticks while importers may buy good dips," said Anil Kumar, Head, Treasury and Executive Director, Finrex Treasury Advisors LLP.
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