Rupee Closes At Over One-Month High On Trade-Deal Prospects

The Indian rupee got a boost on Thursday from prospects of an India-US trade deal in the coming days after Washington struck an agreement with Vietnam.

The local currency ended 39 paise higher at 85.32, the highest closing since May 26. Intraday, the unit strengthened as much as 45 paise, according to Bloomberg data.

"The Indian rupee strengthened to its highest point in a month, primarily due to anticipated foreign capital inflows and a positive outlook on an impending trade agreement with the United States," said Dilip Parmar, senior research analyst at HDFC Securities. 

In the near term, the spot USD/INR exchange rate is expected to find support at 84.95, while encountering resistance at 85.70, he added.

The rupee trailed only the Taiwanese Dollar in Asia in terms of performance.

President Donald Trump announced on Wednesday that the US struck a trade deal with Vietnam, including a 20% tariff on exports to the US. This helped fuel hopes that more deals may be struck ahead of the July 9 deadline.

Besides, American and Indian negotiators are negotiating a bilateral agreement ahead of the July 9 deadline. The US could reach a trade deal with India, Trump said on Tuesday.

The dollar index was flat at 96.83, as odds of a Federal Reserve interest rate cut in July rose after a private sector payrolls report released a day ago surprised with the first fall in over two years.

The euro and the British pound marginally gained. The Japanese Yen shed 0.1% to trade at 143.77 against the greenback.

Most Asian currencies traded higher after the Vietnam deal gave economies the hope of clinching agreements with Trump.