Rupee opens weaker at 88.62, giving up gains from trade deal optimism

Indian Rupee today: The domestic currency opened 6 paise lower at 88.62 against the greenback on Wednesday

The Indian rupee eased after the previous day's gains, as a modest rise in the dollar index offset the impact of lower crude oil prices and optimism over the impending India-US trade deal.

 

The domestic currency opened 6 paise lower at 88.62 against the greenback on Wednesday, according to Bloomberg. The Rupee has risen 0.14 per cent this month, while it has fallen 3.54 per cent this year, Asia’s second-worst performing currency.  

 

The rupee edged towards appreciation on Tuesday, lifted by a softer US dollar and renewed optimism over trade negotiations with the US, analysts said. The movement was not dramatic, but it carried meaning — a sign that momentum may be slowly shifting back in favour of the rupee after weeks of pressure, said Amit Pabari, managing director at CR Forex Advisors. 

   

US President Donald Trump indicated on Wednesday that Washington and New Delhi are nearing a new trade agreement, adding that tariffs imposed on India may be lowered in due course. "We’re working on a deal with India, a very different one from before. They don’t love me right now, but they will again. We’re getting a fair deal," Trump said.

 

The positive tone from Trump offered a sense of relief and improved confidence, especially when paired with weaker U.S. economic data that pushed the dollar lower, Pabari said. 

 

With improving investor sentiment and supportive capital flows, the USD/INR pair finds a crucial support at 88.40, Pabari said. "A sustained break below this level could open the door toward 87.70–88.00, signalling further rupee strength. On the upside, resistance lies at 88.70–88.80."

 

Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said that the deal is yet to be fully priced in and could attract strong foreign portfolio inflows. Exporters are expected to sell near 88.70–88.80 levels, while importers may consider hedging near-term payables, he said. 

 

The dollar Index posted modest gains on optimism that the US government shutdown will end soon. The muted gains also come after fresh figures showed that private employers cut jobs last month. The measure of the greenback against a basket of six major currencies was up 0.06 per cent at 99.50. 

 

In commodities, crude oil prices were lower ahead of the key reports from OPEC and the IEA. Brent crude price was down 0.25 per cent at 65.00 per barrel, while WTI crude prices were lower by 0.28 per cent at 60.87 per barrel, as of 9:10 AM IST.