Rupee recoups early losses to end stronger at 88.61 amid trade deal hopes

Indian Rupee today: The domestic currency closed 3 paise higher at 88.61 against the greenback on Tuesday, according to Bloomberg

The Indian Rupee rose for the second straight session, recovering early losses, supported by optimism around the India-US trade deal and softer crude oil prices. 

 

The domestic currency closed 3 paise higher at 88.61 against the greenback on Tuesday, according to Bloomberg. The Rupee has risen 0.14 per cent this month, while it has fallen 3.50 per cent this year, amongst the worst-performing Asian currencies. 

 

The first tranche of the trade deal between India and the US is "more or less near closure", Business Standard reported earlier. Last week, US President Donald Trump had said that Washington and New Delhi were "pretty close" to reaching a fair trade deal, adding that he would lower tariffs imposed on Indian goods at some point. 

 

Meanwhile, India’s merchandise trade deficit widened to a record $41.68 billion in October, as gold imports trebled and outbound shipments registered their sharpest contraction in 14 months. Merchandise exports fell 11.8 per cent to $34.38 billion, an 11-month low, while goods imports grew 16.66 per cent to an all-time high of $76.06 billion.

 

With the long-overdue US economic data finally set to return after the government shutdown, the market preferred to move carefully, Amit Pabari, managing director at CR Forex Advisors, said. "The atmosphere felt like the few seconds before a curtain lifts, everyone knows something important is about to be revealed, but no one knows exactly what it will look like. This sense of uncertainty kept the market defensive, giving the dollar a natural lift."

 

The broader tilt is gradually turning in favour of the rupee, Pabari said. "A clear break below 88.40 could pave the way for a move toward 88.00–87.70, indicating further strength."

 

The dollar traded lower as market expectations for a Federal Reserve rate cut in December have been scaled back. Analysts said that this is driven largely by missing data that has made the Fed more cautious. The measure of the greenback against a basket of six major currencies was down 0.06 per cent at 99.52.

 

In commodities, crude oil prices fell amid geopolitical tensions and supply uncertainties. Brent crude price was down 0.44 per cent at 63.92 per barrel, while WTI crude prices were lower by 0.42 per cent at 59.68 per barrel, as of 3:25 PM IST.