Rupee snaps five-day gaining streak; ends 9 paise lower at 85.60/$

Indian Rupee today: The domestic currency depreciated 9 paise to end at 85.60 against the greenback, after closing at 85.51 on Wednesday

The Indian Rupee snapped five days of gain on Thursday, amid a cool-off in crude oil prices and a weak dollar index. 

 

The domestic currency depreciated 9 paise to end at 85.60 against the greenback, after closing at 85.51 on Wednesday, according to Bloomberg. The currency, however, opened higher at 85.43 against the dollar on Tuesday, a gain of 8 paise. Asian currencies were mostly stronger during the session.

 

All eyes will be on the consumer price inflation data for May, which will be released later today. CPI is likely to ease to a more than six-year low of 3 per cent in May, given a favourable base and a further moderation in food prices. 

 

 

  The rupee traded weak as expected foreign institutional investor (FII) selling in the capital markets weighed on sentiment, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "Weakness in secondary markets points to potential outflows, which could push the rupee towards 86.00. Global uncertainty over the US debt ceiling is also adding pressure due to external vulnerabilities."

 

The dollar index trades slightly lower, a day after the US inflation came in lower than expected. The consumer price index, excluding the often volatile food and energy categories, increased only 0.1 per cent from April. Following the inflation print, calls for the Federal Reserve to slash rates came from all sides. 

 

However, trade tensions remained after President Donald Trump said he would set unilateral tariff rates within two weeks. This came after the Chinese and US agreed to defuse the trade tensions. China will supply rare earths and magnets “up front”, and the US will allow Chinese students into its universities as part of a trade agreement. 

 

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.24 per cent at 98.39. The dollar slid on Thursday amid signs of a softer US stance on tariffs and rising expectations of Fed rate cuts after weaker CPI data, Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP, said.  

 

According to reports, the dollar-rupee forward premiums have witnessed sharper moves, after by the Reserve Bank of India's (RBI's) surprise rate cut last week and changes in expectations of US rate cuts.

 

Meanwhile, crude oil prices traded lower after yesterday's spike, given the escalation of tensions in the Middle East. Brent crude price was down 1.35 per cent to $68.83 per barrel, while WTI crude prices were lower by 1.39 per cent at 67.20, as of 3:40 PM IST.