Rupee bucks Asian trend; opens higher amid Trump-Powell tensions

Indian Rupee today: The domestic currency opened 3 paise higher at 85.91 against the dollar on Thursday, according to Bloomberg

The Indian Rupee advanced slightly on Thursday amid weak Asian currencies as uncertainties rose regarding the leadership in the US Federal Reserve. 

 

The domestic currency opened 3 paise higher at 85.91 against the dollar on Thursday, according to Bloomberg. The rupee has witnessed 0.28 per cent depreciation in the current calendar year. Barring the Indian rupee and China’s renminbi, all major Asian currencies fell in trade on Thursday.

 

The currency witnessed a volatile session on Wednesday, as the dollar index strengthened, analysts said. Inflows from State Bank of India's (SBI’s) fundraise supported the rupee early on, but late-day demand from foreign portfolio investors (FPIs) and oil companies weighed on it. 

   

"For today, the rupee is expected to trade in the range of 85.75 to 86.25, with the Reserve Bank of India (RBI) likely to intervene around the 86.00 level," according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.  

 

Optimism remains high over a potential India-US trade deal, with US President Donald Trump expressing renewed hope for a quick conclusion, analysts noted. Trump hinted that a trade deal with India could mirror the one struck with Indonesia, which now faces a 19 per cent tariff, indicating India may also have to brace for tariffs exceeding the 10 per cent threshold under the proposed interim agreement.

 

On Wednesday, Trump denied reports that he planned to remove Powell after he floated the idea in a meeting with congressional Republicans, which was leaked to the media. The dollar index whipsawed, a measure of the greenback against a basket of six major currencies, and was up 0.15 per cent at 98.54.

 

Meanwhile, with the euro weakening against the dollar, the EUR/INR pair has declined to around 99.86, Bhansali said. "Importers with euro payables are advised to hedge one-month obligations at 99.64, and consider further hedging once EUR/USD approaches the 1.15 level."

 

Going ahead, key US data, including PPI and initial jobless claims, are expected to keep the rupee volatile, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "The currency is likely to trade in a range of 85.45 to 86.25."

 

In commodities, crude oil prices snapped a three-day fall after US data showed a sharper-than-expected drop in crude inventories. Brent crude price was up 0.58 per cent at $68.92 per barrel, while WTI crude prices were higher by 0.75 per cent at 66.88, as of 9:15 AM IST.