Rupee closes flat ahead of US-China trade talks; ends at 85.63/$

Indian Rupee today: The domestic currency depreciated 1 paise to end at 85.63 against the dollar, after closing at 85.64 on Friday

Indian Rupee closed flat against on Monday, even as the dollar slightly fell ahead of the US-China trade talks that are scheduled to happen later today. 

 

The domestic currency depreciated 1 paise to end at 85.63 against the greenback, after closing at 85.64 on Friday, according to Bloomberg. The local unit has fallen by 0.06 per cent so far this month, while most Asian currencies gained. 

 

The dollar index remained weak as the US and China set to open their second round of trade talks Monday in London. Meanwhile, Beijing has already approved some rare-earth exports to the US, according to reports. The index, which measures the greenback against a basket of six major currencies, was down 0.35 per cent at 98.83. 

 

The positive US jobs data, which provided some relief to the dollar, now pegged back hopes of Fed rate cuts, with interest rate futures pricing in 60% odds of a reduction in or before September, according to the CME Group's FedWatch Tool. 

 

Analysts at Nomura see limited support for the currency from a macro perspective due to continued downside growth challenges ahead, along with RBI rate cuts. "Overall, we still expect INR to underperform, and today’s actions and the policy/macro outlook do not change this view."

 

A decline in the currency is seen a day after the Reserve Bank of India (RBI) delivered a 50 basis points Repo Rate cut and a 100 basis points Cash Reserve Ratio (CRR) cut, while shifting its policy stance from "Accommodative" to "Neutral". 

 

Markets found reassurance in the Governor's comments, allowing the rupee to appreciate at Friday’s close despite the rate cut, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.  "For now, the rupee appears to be range-bound between 85 and 86, with a potential breakout on either side depending on capital flows."

 

In commodities, crude oil prices were trading flat as traders assessed the US-China trade talks. Brent crude price was up 0.06 per cent to $66.51 per barrel, while WTI crude prices were flat at 64.58, as of 3:30 PM IST.