Indian Rupee opens higher at 85.59/$ as US fiscal concerns weigh on dollar

Indian Rupee today: The domestic currency began the session 5 paise stronger at 85.59 against the dollar

Indian Rupee opened higher on Thursday, snapping a two-day fall, as fiscal deficit concerns in the US trigger more pressure for the Dollar index. 

 

The domestic currency began the session 5 paise stronger at 85.59, after closing at 85.64 against the greenback on Wednesday, according to Bloomberg data. 

 

The dollar index fell for the fourth consecutive day as US President Donald Trump continued to push his sweeping spending and tax-cut bill. The index, which measures the greenback against a basket of six major currencies, was 0.07 per cent lower at 99.49.

 

The US House of Representatives Rules Committee voted to advance President Donald Trump's sweeping tax cut, setting the stage for a vote on the House floor. This has caused concerns as the tax cuts would cost $3.8–4.5 trillion over a decade, according to reports.  

 

Indian rupee fell yesterday before closing at 85.64 on constant demand from oil companies and importers, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "Rupee may open at 85.52 and the trading is to be done within the range of 85.25/75 for the day."

 

With the dollar index below 100 and Asian currencies up, any downside to the rupee can be used by exporters to sell dollars, Bhansali said. 

 

The narrowing yield differential between India and the US is making Indian assets less attractive, prompting global funds to pull out money from Indian markets, Amit Pabari, managing director at CR Forex Advisors, said. "This outflow is putting additional pressure on the rupee." Rising geopolitical tensions in the Middle East have pushed crude oil prices higher, further adding pressure to the rupee, he added.  

 

On the brighter side, the Chinese Yuan and Japanese Yen have started appreciating against the dollar, offering a measure of support to the rupee, Pabari said. "Technically, the dollar/rupee pair is expected to trade in a range as it faces strong resistance near 85.80, while immediate support lies at 85.20-85.30 levels."

 

Meanwhile, crude oil prices fell as an increase in US crude inventories overshadowed reports that Israel is preparing for a potential strike on Iranian nuclear sites. Brent crude price was down 0.05 per cent to $64.88 per barrel, while WTI crude prices were flat at 61.57, as of 9:10 AM IST.