Rupee ends slightly higher at 85.52/$; falls for second straight week

Rupee closed 3 paise higher at 85.52 after ending at 85.55 against the greenback on Thursday

Indian Rupee pared early gains on Friday to end marginally higher amid a weakness in the dollar index and crude oil prices. 

 

The domestic currency closed 3 paise higher at 85.52 after ending at 85.55 against the greenback on Thursday, according to Bloomberg data. The currency gave up its early gains as it opened 25 paise higher against the dollar. 

 

On a weekly basis, the currency logged fell for the second straight week, depreciating 0.16 per cent. 

 

The weakness in dollar index persisted after the US clarified that it is not seeking to weaken the dollar as part of trade deals. The dollar Index, which measures the greenback against a basket of six major currencies, was trading 0.12 per cent lower at 100.75. 

 

 

The dollar index fell as the US 10-year yield fell to 4.42 per cent after downside surprises from US data this week cemented bets that the Federal Reserve will cut rates more than three times this year, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said.

 

Recent global data points to a potentially softening US economy, which could weigh further on the dollar and provide medium-term support to the rupee, according to Amit Pabari, managing director at CR Forex Advisors. 

 

Meanwhile, the currency's movement also comes after the country's trade data. India’s merchandise trade deficit widened significantly to $26.42 billion in April from $21.5 billion in March, as a 9 per cent year-on-year uptick in exports was outweighed by a far sharper surge in imports. While April’s exports stood at $38.5 billion, imports rose to $64.91 billion, 19.1 per cent higher than a year ago.  

 

 

The sharp rise, driven by an imbalance in trade growth, adds pressure to the rupee by expanding the current account deficit, Pabari said. "Given a softer dollar and strong equity inflows, the rupee may stay range-bound near term. However, a widening trade deficit and geopolitical risks pose downside pressure."

 

In commodities, crude oil prices were down, following a sharp decline on Thursday, as the US-Iran nuclear deal sparked oversupply concerns. Brent crude price was down 0.02 per cent to $64.52 per barrel, while WTI crude prices were lower by 0.06 per cent at 61.58, as of 3:45 PM.