Rupee opens flat at 85.13/$ after five-day rally; Dollar weakness persists

The Indian rupee opened flat on Tuesday, a day after logging its fifth consecutive session of gains, as dollar weakness persisted amid renewed foreign inflows into equities.

 

The domestic currency opened flat at 85.13 paise, a one-paise gain after closing at 85.14 against the greenback on Monday, according to Bloomberg data. The currency has gained nearly ₹1.56 in the last six sessions. 

 

The gain in the currency comes as the dollar index further weakned with the ongoing tussle between US President Donald Trump and Federal Reserve Chair Jerome Powell. US President Donald Trump repeatedly called for “Mr. Too Late” Powell to cut interest rates immediately. The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.19 per cent to 98.08, the lowest since April 2022.  

 

The political influences over the Fed’s independence, along with recessionary fears, have raised concerns, weighing further on investor sentiment and pushing the dollar Index lower, according to Amit Pabati, managing director of CR Forex Advisors. The dollar index is likely to face strong support near 98.00 levels and resistance at 99.50 levels, he said. 

 

Meanwhile, foreign portfolio investors continued to buy equities for the fourth consecutive day on Monday. Global funds bought stocks worth ₹1,970.17, taking the four-day purchase to over ₹16,600 crore. 

 

In a relief to banks, the Reserve Bank of India (RBI) has mandated a 2.5 per cent additional run-off factor for retail deposits linked to internet and mobile banking (IMB) facilities for commercial banks. 

 

Given all these, the rupee is expected to remain in a range of 85 to 85.50 as it opens lower at 85.25 today, as some short covering on the dollar is expected, Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP said. "Exporters need to wait for hedging, while importers can hedge for the near term (up to 1 month) while waiting for the far term."

 

Crude oil prices edged higher on Tuesday, a day after the commodity plunged amid concerns about the impact of the energy demand and the global economy. Brent crude oil was down 0.48 per cent to $66.58 per barrel, while WTI crude was down 1.03 per cent at 63.73 per barrel as of 9:35 AM IST.