Indian Rupee opens 71 paise stronger at 84.67/$ as border tensions ease

The Indian Rupee opened higher on Tuesday, supported by easing geopolitical tensions, despite a strengthening US dollar index following a trade truce between the United States and China.

 

The domestic currency opened 71 paise higher at 84.67 after ending at 85.38 against the greenback on Friday, according to Bloomberg data. Trading in the currency market was shut on Monday on account of a public holiday. 

 

After two days of trade negotiations by the world’s biggest economies, a de-escalation of tariffs was announced with the US slashing duties on Chinese products to 30 per cent from 145 per cent and Beijing dropping its levy on most goods to 10 per cent. 

 

 

The reduction in tariffs and the consequent easing of the global trade war sent stocks and the dollar soaring. After rising nearly 1.5 per cent on Monday, the dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.16 per cent at 101.62. 

 

Meanwhile, the gains in the currency came after India and Pakistan agreed to a full and immediate ceasefire on Saturday. After four days of fighting that risked transforming into an all-out war, the nuclear-armed rivals agreed to a full and immediate ceasefire.  

 

The currency market was closed yesterday and today the dollar-rupee pair would see string opening as the rise in the dollar index and Chinese currency conflicted with each other, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. But there is some positive optimism in the air due to the ending of trade war."

 

Prime Minister Narendra Modi on Monday evening laid out the three key tenets of India’s new doctrine to counter terrorism, stating that Operation Sindoor has set a new benchmark and is the “new normal”. 

 

The currency pair may face selling pressure on upticks near 85.00 and above, while levels around 84.25 could attract buying interest from importers and the Reserve Bank of India (RBI), which may seek to maintain readiness for any developments on the geopolitical front despite the current truce, Bhansali said.

 

In commodities, crude oil prices pared gains amid easing global trade tensions after the US and China agreed on a 90-day truce. Brent crude price was down 0.46 per cent to $64.66 per barrel, while WTI crude prices were lower by 0.44 per cent at 61.68, as of 9:10 AM.