Indian Rupee ends weaker at 85.42/$ as dollar index stages recovery

The Indian Rupee closed weaker on Wednesday, as the rebound in the dollar index, following comments by US President Donald Trump regarding trade tensions with China, helped ease pressure on the greenback.

 

The domestic currency ended 23 paise weaker at 85.42 after closing at 85.19 against the greenback on Tuesday, according to Bloomberg data. The second day of decline in the currency comes after the local unit snapped a five-day winning streak that triggered an appreciation of nearly ₹1.5 against the dollar. 

 

Indian Rupee fell after the attacks on Kashmir created a negative sentiment, while the rise in dollar index 99.26 kept the dollar well bid against the rupee, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "The rupee is expected to trade in the range of 85.25/75 tomorrow as we continue to watch the developments from trade tariffs and India’s retaliation." 

 

Trump, on Tuesday, signalled easing trade tensions with China and ruled out plans to remove Federal Reserve Chair Jerome Powell. This diplomatic pivot has reduced recessionary fears, leading markets to trim expectations for aggressive easing by the Federal Reserve, according to Amit Pabari, managing director at CR Forex Advisors.

 

The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was up 0.09 per cent to 99, as of 3:40 PM IST. The dollar index is likely to face support at the 98.50 level and resistance at the 99.60 level, according to Pabari. "A breach of the resistance could pave the path towards 101.50-102.00 levels." 

 

Meanwhile, foreign portfolio investors continued to buy equities for the fifth consecutive day on Tuesday. Global funds bought stocks worth ₹1,290.43, taking the four-day purchase to over ₹17890 crore. 

 

Crude oil prices climbed for the second day, as investors assessed the impact of a new round of sanctions on Iran. Brent crude oil was up 1.30 per cent to $68.32 per barrel, while WTI crude was up 1.35 per cent at 64.53 per barrel as of 3:40 PM IST.