Indian Rupee extend gains to day five; Opens 27 paise stronger at 85.11/$

Indian rupee extended its gains on Monday, appreciating for the fifth consecutive session, as the weakness of crude oil and the dollar index supported the currency. 

 

The domestic currency opened 27 paise stronger at 85.11 against the greenback, after closing at 85.38 on Thursday, according to Bloomberg data. The currency has gained nearly ₹1.58 in the last five sessions. 

 

With India offering strong forex reserves, steady inflation, and competitive interest rates, the rupee is increasingly becoming a beneficiary of this global repositioning, according to Amit Pabari, managing director, CR Forex Advisors. "Looking ahead, the USDINR pair is expected to trade within the 85.00–85.50 range. A decisive break below 85.00 could open the door for further sharp appreciation of the rupee."

 

The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.89 per cent to 98.34, the lowest since April 2022. The US dollar has been facing sustained pressure, with the Dollar Index down over 9 per cent year-to-date, pabari noted.  

  This reflects growing expectations that the Federal Reserve may eventually be forced to pivot. Given signs of economic softening, markets are indicating that the Fed will have to cut rates sooner rather than later, he added. "Such a move would further weigh on the dollar’s strength."

 

Meanwhile, the domestic currency is also supported by rising foreign inflows into the equity market. Foreign investors have infused nearly ₹8,500 crore in the country's equity markets last week, after a phase of heavy outflows earlier in the month. 

 

The Indian rupee is expected to open at 85.20 as the dollar index fell to its lowest in three years while all assets rose against the dollar, according to Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.  The rupee is expected to trade in a range of 85 to 85.60 as markets look to the Reserve Bank of India for buying the dollar after exporters remained unhedged, he said. "We wait and watch as to what happens to trade negotiations, geopolitical situations and the trade war."  

 

Crude oil prices slipped amid concerns about the impact of the energy demand and the global economy, driven by the US trade.  Brent crude oil was down 1.53 per cent to $66.92 per barrel, while WTI crude was down 1.52 per cent at 63.70 per barrel as of 9:22 AM IST.