Rupee advances 38 paise as dollar index softens; ends at 85.71/$

Indian Rupee today: The domestic currency closed 38 paise higher at 85.71, a day after closing at 86.09 against the dollar

The Indian rupee strengthened on Thursday, supported by a declining dollar index and easing geopolitical tensions that boosted investor sentiment.

 

The domestic currency closed 38 paise higher at 85.71, a day after closing at 86.09 against the dollar, according to Bloomberg. The unit has depreciated by 0.15 per cent so far this month, among the worst-performing ones in Asia. 

 

Rupee gained over 33 paise, buoyed by a sharp drop in the dollar index below the 97.00 mark, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "Falling crude prices and a weaker dollar provided strong support to the rupee." 

 

With global risk sentiment improving and the potential for continued fund inflows, the rupee may head towards 85.25 in the coming days, Trivedi noted.  

 

The US dollar weakened after US President Donald Trump said he was considering an early appointment for the next Federal Reserve chairman. The US dollar index, which measures the greenback against a basket of six major currencies, was down 0.55 per cent at 97.13.

 

Coming to the West Asia conflict, Trump said the war between Israel and Iran is over, but later warned that new fighting could start soon. Trump added that the US would hold a meeting with Iran next week. 

 

Brent crude price was up 0.04 per cent at $67.71 per barrel, while WTI crude prices were higher by 0.17 per cent at 65.03, as of 3:35 PM IST.

 

Meanwhile, the HDB Financial Services initial public offering saw improved demand, with subscription reaching 87 per cent by Thursday midday, as per BSE data. Subscription levels are expected to pick up over the next two days, potentially leading to higher foreign inflows in the USD/INR pair, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, noted.  

 

Economic activity is holding firm in India amid a challenging global environment, and financial conditions remained conducive to facilitating an efficient transmission of interest rate cuts to the credit market, Reserve Bank of India officials said in a report on the ‘State of the Economy’ in its monthly bulletin.

 

The RBI's bulletin showed a decline in its short dollar position to $73 billion, with outstanding positions of up to three months falling to $15 billion, experts noted. "This provides the central bank with greater flexibility to intervene in the event of pressure on the rupee," Bhansali said.