Rupee edges higher with US-China trade talks in focus; opens at 85.62/$

Indian Rupee today: The domestic currency appreciated 1 paise to end at 85.62 against the greenback, after closing at 85.63 on Monday

The Indian Rupee opened flat and edged higher on Tuesday, even as the dollar and oil prices rose amid the ongoing US-China trade talks. 

 

The domestic currency appreciated 1 paise to open at 85.62 against the greenback, after closing at 85.63 on Monday, according to Bloomberg. The local unit rose to 85.57 in initial trade, but has fallen by 0.02 per cent so far this month. 

 

The Rupee, which moved between 85.47 and 85.73 yesterday, is expected to trade in a similar range today, between 85.45 and 85.95, with an opening near 85.64, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. 

 

  As markets await the outcome of US-China trade talks, the rupee remains range-bound between 85 and 86, with daily inflows and outflows driving movement, he said. "For the day, importers may consider buying near 85.45, while exporters could look to sell above 85.80 on an intraday basis." 

 

The dollar remained firm on Tuesday as the US-China trade talks entered the second day in London. Although the first day yielded no breakthroughs, US President Donald Trump said he’s receiving “good reports,” while noting that “China’s not easy.” The index, which measures the greenback against a basket of six major currencies, was up 0.22 per cent at 99.15.

 

Meanwhile, the positive US jobs data last week has helped peg back hopes of Fed rate cuts, with interest rate futures pricing in 60 per cent odds of a reduction in or before September, according to the CME Group's FedWatch Tool.

 

The Reserve Bank of India's (RBI) larger-than-expected 50-basis-point interest rate cut on Friday has had little impact on the rupee so far, according to reports. The central bank also slashed the cash reserve ratio (CRR) by 100 basis points to 3 per cent. 

 

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."

 

Crude oil prices advanced on Tuesday as investors remained on edge with the US-China trade talks extending to the second day. Brent crude price was up 0.45 per cent to $67.34 per barrel, while WTI crude prices were up 0.41 per cent at 65.56, as of 9:07 AM IST.