Rupee opens slightly higher at 85.97/$; focus shifts to RBI dividend

Indian Rupee today: The domestic currency began the session 3 paise higher at 85.97 on Friday, after closing at over a month's low on Thursday

The Indian rupee opened stronger on Friday, a day after closing at over a one-month low, amid weaker crude oil prices and the dollar index. 

 

The domestic currency began the session 3 paise higher at 85.97 on Friday, after closing at over a month's low of 86.00 on Thursday. The currency is likely to end lower for the third straight week and has fallen 1.8 per cent this month so far, according to Bloomberg data. 

 

After holding ground for weeks, the rupee slipped past the critical 86.00 mark, triggered by relentless foreign outflows from equities while importers' stop-losses got triggered, Amit Pabari, managing director of CR Forex Advisors. Global funds sold a net ₹5,045.36 crore from the equity cash market on Thursday, according to NSE data.  

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Foreign Institutional Investors (FIIs) continue their sell-off due to a narrowing bond yield differential between Indian and US 10-year bonds, Pabari said. This narrowing spread – last seen in July 2004 – is turning India less attractive for carry trades, compounding rupee pressure.

 

Meanwhile, attention now shifts to the Reserve Bank of India as the central bank is expected to transfer a surplus between Rs 2.2 trillion and Rs 3.1 trillion to the government as a dividend for the financial year 2024-25 (FY25). 

 

"We continue with our call to sell the dollar as India continued to do well on other fundamentals indicated by yesterday's PMI, which came better than expected, particularly the Service PMI, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. "The rupee range for today is between 85.75/86.25 with upticks on dollar to be sold by exporters, while importers are to keep a watch till their level is achieved." 

 

  The US House on THursday passed a sweeping tax bill that adds $3.8 trillion to the US debt over the next decade, worsening fiscal worries. Despite its recent strength, the Dollar Index is showing signs of fatigue as mounting US fiscal concerns weigh on sentiment, Pabari said. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.33 per cent at 99.63.

 

In commodities, crude oil prices traded lower amid reports that OPEC+ is discussing a production increase for July. Brent crude price was down 0.64 per cent to $64.03 per barrel, while WTI crude prices were 0.69 per cent lower at 60.78, as of 9:30 AM IST.