Rupee weakens despite trade deal optimism; opens lower at 88.66/$

Indian Rupee today: The domestic currency opened 2 paise lower at 88.66 against the greenback on Tuesday

The Indian Rupee shrugged off positive trade-deal sentiment and traded weaker on Tuesday, even as the dollar and crude oil prices declined.

 

The domestic currency opened 2 paise lower at 88.66 against the greenback on Tuesday, according to Bloomberg. The Rupee has risen 0.11 per cent this month, while it has fallen 3.57 per cent this year, amongst the worst-performing Asian currencies. 

 

The rupee traded on Monday with a quiet kind of confidence, neither breaking out nor slipping, simply holding its ground as global and domestic cues began to align in curious ways, analysts said. 

   

The currency continues to trade within a tight band, with firm resistance at 88.80-89.00 and initial support around 88.40, according to Amit Pabari, managing director at CR Forex Advisors. "The broader tilt is gradually turning in favour of the rupee. A clear break below 88.40 could pave the way for a move toward 88.00-87.70, indicating further strength."

 

The sentiment appears to have improved on indications of progress in the US-India trade deal, though no concrete details have been released, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. Exporters should continue selling around the 88.75-88.80 levels, while importers are advised to buy on dips to cover near-term payment requirements, he said.

 

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.

 

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 0.07 per cent at 99.52.

 

In commodities, crude oil prices fell amid geopolitical tensions and supply uncertainties. Brent crude price was down 0.50 per cent at 63.88 per barrel, while WTI crude prices were lower by 0.52 per cent at 59.60 per barrel, as of 9:00 AM IST.