Rupee strengthens on optimism around progress in India-US trade talks

The rupee strengthened on Monday on the back of optimism over progress in India–US trade talks and expectations of fresh foreign inflows, said market participants.

 

The local currency appreciated by 13 paise to settle at 88.57 per dollar, against the previous close of 88.70 per dollar.

 

Meanwhile, steady dollar sales by state-run banks and institutions helped limit volatility in the currency market.

 

“The Indian rupee inched higher today by 13 paise to end the session at 88.5675, supported by optimism over progress in trade discussions between India and the United States along with likely foreign inflows. Positive cues from the trade front improved overall market sentiment, with equities also registering a mild uptick,” said Abhishek Goenka, founder and chief executive officer, IFA Global. “State-run banks and institutional dollar sellers were seen offering support at lower levels, helping stabilise the currency and prevent sharp volatility,” he added.

 

However, steady importer demand and uncertainty over the outcome of trade talks limited further gains. While the improving dialogue between the two countries has boosted sentiment, a sustained rise in the rupee will depend on concrete policy steps and stronger capital inflows, said market participants.

 

“Key support rests at 88.30–87.50, while resistance remains near 88.80. A dip below 88.50 could drag the pair towards 88.30, whereas a sustained move above 88.80 may pave the way towards the 89.00 psychological zone,” said Ritesh Bhansali, vice-president, Mecklai Financial Services.

 

The dollar index was largely steady at 99.55, against the previous close of 99.62. It measures the strength of the greenback against a basket of six major currencies.