Indian Rupee gains for third session; Opens 16 paise stronger at 85.61/$

The domestic currency strengthened 16 paise to end at 85.61 against the greenback after closing at 85.77 on Tuesday

The Indian Rupee extended its gaining streak to a third day on Wednesday, opening stronger as continued weakness in the dollar index supported the currency.

 

The domestic currency strengthened 16 paise to open at 85.61 against the greenback after closing at 85.77 on Tuesday, according to Bloomberg data. In the last three sessions, the currency has depreciated by ₹1.08, capping the monthly fall to 0.13 per cent in April.  

 

The Rupee, along with its emerging markets peers have regained momentum from a weak dollar index. The measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.39 per cent at 99.8, as of 9:05 AM IST, its lowest level since April 2022.  Meanwhile, the US President Donald Trump launched a probe into potential tariffs on critical minerals, while also urging China to begin talks to ease the escalating trade tensions.

 

 

This sharp upward movement in Rupee was primarily driven by favourable domestic economic data releases, particularly the inflation data, according to Amit Pabari, managing director of CR Forex Advisors. 

 

India’s retail inflation further eased to 3.34 per cent in March from a seven-month low of 3.61 per cent in February, the lowest year-on-year reading since August 2019. 

 

Meanwhile, India’s trade deficit widened to $21.54 billion, primarily due to a significant increase in imports. "This is also positive for the rupee in the medium term as India imported cheap oil, which will help the inflation rate to stay below the RBI's target range," Pabari said.  

 

Exporters are expected to wait for appropriate levels to do further hedging while importers can keep converting their payables in cash while waiting for 85/85.25 levels to hedge, Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP, said. 

 

The Reserve Bank of India is expected to keep a tab on the Rupee to ensure the gains are not too big that it hurt the exporters, Bhansali said. 

 

Crude oil prices edged lower amid a sour demand outlook driven by trade war concerns. Brent crude oil was down 0.28 per cent to $64.49 per barrel, while WTI crude was down 0.28 per cent at 61.16 per barrel as of 9:20 AM IST.