The rupee appreciated 18 paise to 87.34 against the US dollar in early trade on Monday, supported by positive domestic equities, even as external risks remain elevated.
Forex traders said the near-term direction of the rupee will depend on two key events — the implementation of the August 27 tariff and upcoming US economic data ahead of the Federal Reserve’s September 17 meeting.
At the interbank foreign exchange, the rupee opened at 87.38, then touched an early high of 87.34, registering a gain of 18 paise over its previous close.
On Friday, the rupee fell 27 paise to close at 87.52 against the greenback.
The rupee continued its weakness against the dollar on Friday and on Monday opened slightly higher as US-India trade tensions continue to hamper its value amid expectations of a Fed rate cut, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
“The RBI seems to have been actively intervening to curb excessive depreciation,” Bhansali said, adding that the local unit might be under pressure if outflows accelerate due to the 25 bps extra trade tariffs by the Trump Administration on August 27.
Meanwhile, Republican leader Nikki Haley has said that India should take President Donald Trump’s concerns over its procurement of Russian crude oil seriously and work with the White House to find a solution to the issue.
The Trump administration has been severely critical of India for its procurement of discounted crude oil from Russia. Interestingly, Washington has not been criticising China, the largest importer of Russian crude oil.
Defending its purchase of Russian crude oil, India has been maintaining that its energy procurement is driven by national interest and market dynamics.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, gained 0.15 per cent to 97.86, after dropping sharply last week due to the US Fed’s signal of a potential rate cut.
The Fed Chairman Jerome Powell’s remarks at Jackson Hole indicated that rate cuts may be considered as risks in the US labour market build, leading to an 87 per cent chance of a 25 bps rate cut.
Brent crude, the global oil benchmark, was trading 0.10 per cent higher to USD 67.80 per barrel in futures trade, as expectations of a US rate cut buoyed the outlook for global growth and fuel demand.
On the domestic equity market front, the Sensex climbed 285.62 points to 81,592.47 in early trade, while the Nifty was up 91.25 points to 24,961.35.
Foreign Institutional Investors offloaded equities worth Rs 1,622.52 crore on Friday, according to exchange data.
Meanwhile, India’s forex reserves rose by USD 1.488 billion to USD 695.106 billion during the week ended August 15, according to RBI data released on Friday.
In the previous reporting week, the overall reserves had increased by USD 4.747 billion to USD 693.618 billion.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
