Rupee gains 45 paise; Opens at 86.24/$ as dollar, oil prices extend slide

The Indian Rupee opened stronger on Friday, supported by a sharp decline in the dollar index and oil prices, amid rising US-China trade tensions.

 

The domestic currency weakened 45 paise to open at 86.24 against the greenback after closing at 86.69 on Wednesday, according to Bloomberg data. In the last three sessions, the currency has depreciated by ₹1.45 as global trade uncertainties rose with US tariffs. 

 

The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — fell over 3 per cent on Thursday, falling to the 99.70 level, its sharpest decline in over a year.  This move was driven by softer-than-expected inflation data and a "surprising" diplomatic tone from Donald Trump on US-China trade relations, according to Amit Pabari, managing director of CR Forex Advisors. The overall US consumer price index (CPI) declined 0.1 per cent from a month earlier, the first decrease in nearly five years.

 

 

  Pabari also noted that the US bond yields rose by over 16 basis points despite the falling dollar due to a notable pullback by foreign investors. US President Donald Trump announced a 90-day tariff pause for all countries except China, which now has a 145 per cent levy on all goods. 

 

Chinese yuan gaining pace, sharp fall in the dollar index has provided support to regional emerging market currencies, according to analysts. "With the rupee now firming and sentiment improving, a sustained breach below 86.00 could open the door for further gains toward the 85.50–85.60 levels," Pabari said. 

 

The rupee is expected to rise above 86 with the dollar index down below its September low of 100.20 with expectations of a further fall to 95 levels, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "A good uptick has allowed exporters to cover their exports holding and any upside due to risk aversion should be utilised for further covers." 

 

Crude oil prices were poised to drop for a second week in a row on concerns of a prolonged trade war between China and the US.  Brent crude oil was down 0.38 per cent to $63.09 per barrel, while WTI crude was down 0.45 per cent at 59.80 per barrel as of 9:05 AM IST.