Rupee posts best session in over one month; ends 28 paise higher at 87.43/$

Indian Rupee today: The domestic currency rose 28 paise, or 0.32 per cent, to close at 87.43 against the dollar on Wednesday

The Indian Rupee recorded its strongest gain in over a month on a weaker dollar, after domestic retail inflation eased to an eight-year low of 1.55 per cent in July.

 

The domestic currency rose 28 paise, or 0.32 per cent, to close at 87.43 against the dollar on Wednesday, marking its best session since July 3, according to Bloomberg. The rupee has depreciated by 2.13 per cent in the current calendar year.

 

The currency traded strongly on optimism over possible positive developments in the Russia-Ukraine conflict, as US President Donald Trump and Russian President Putin are set to meet on August 15, Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities, said. "Softer CPI data in both India and the US also aided sentiment. The rupee is expected to trade in a range of 87.25-88.00."

 

Any ceasefire agreement between Russia and Ukraine could be positive for India, as the additional 25 per cent tariff Trump levied on Russian oil purchases would be void. 

 

Meanwhile, the last time the Consumer Price Index (CPI) had been this benign was in June 2017, when it recorded a 1.46 per cent uptick. The decline in retail inflation was aided by a deepening deflation in several food items. Data showed that food inflation, which had turned negative in June, declined by another 1.8 per cent in July.

 

Core inflation, which excludes volatile segments such as food and energy, declined to 4.1 per cent during the month.

 

Analysts expect consumer demand to pick up in light of the mild inflation trend, and reckon that monetary policy actions will hinge on the trajectory and outlook for prices and economic growth. The Reserve Bank of India (RBI) last week pegged the average price rise pace for 2025-26 (FY26) at 3.1 per cent from 3.7 per cent. 

 

Meanwhile, in the US, the core CPI, which excludes food and energy costs, climbed 0.3 per cent in July, the fastest pace since the start of the year, driven mainly by higher services prices. Traders upped their bets that the Federal Reserve could cut interest rates in September. 

 

The dollar index, a measure of the greenback against a basket of six major currencies, was down 0.46 per cent at 97.64.

 

Foreign portfolio investors (FPIs) have been pulling out, keeping the dollar well bid, with further rupee weakness likely to accelerate outflows. Global funds have been net sellers of ₹16,062 crore so far this month. 

 

In commodities, crude oil prices declined ahead of the crude oil inventory figures due on Wednesday. Brent crude price was down 0.51 per cent at 65.78 per barrel, while WTI crude prices were lower by 0.66 per cent at 62.75, as of 3:38 PM IST.