Rupee drops amid firm dollar; ends 12 paise lower at 85.94/$

Indian Rupee today: The domestic currency closed 12 paise lower at 85.94 against the dollar on Wednesday, according to Bloomberg

The Indian Rupee slipped in Wednesday’s trade as the US dollar strengthened, after traders dialed back expectations of rate cuts by the Federal Reserve following the latest inflation data. 

 

The domestic currency closed 12 paise lower at 85.94 against the dollar on Wednesday, according to Bloomberg. The rupee has witnessed 0.39 per cent depreciation in the current calendar year.

 

Rupee traded weak as the dollar gained momentum holding above 98.50 levels, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "Going ahead, key US data including PPI and initial jobless claims are expected to keep the rupee volatile. The currency is likely to trade in a range of 85.45 to 86.25."

 

   

The dollar index pared Tuesday's gains as reports indicated that companies are passing tariff-related costs on to consumers. Core inflation in US, which excludes the volatile food and energy components, rose by just 0.2 per cent in June from May, marking the fifth straight month of softer-than-expected underlying price increases. The dollar index, a measure of the greenback against a basket of six major currencies, pared gains and was down 0.08 per cent at 98.53. 

 

On the tariffs front, Trump sealed a deal with Indonesia, imposing a 19 per cent tariff on its goods, and said that a pact with India will work along that same line. He also said that tariffs on pharmaceuticals could be imposed as early as the end of the month. 

 

Merchandise exports in June were recorded at $35.14 billion, nearly flat from $35.16 billion in the same month last year. On the import side, the country saw a 3.71 per cent year-on-year decline, totalling $53.92 billion. India’s trade deficit narrowed more than expected, signalling a slowdown in economic activity, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, noted. 

 

Exporters can continue selling around the 86.00 mark, while importers may choose to wait for intra-day dips to hedge, especially with flows from SBI’s QIP expected in two to three tranches, according to Bhansali. 

 

In commodities, crude oil prices down on expectations of a steady demand from the US and China, amidst an improving economic outlook. Brent crude price was down 0.23 per cent at $68.55 per barrel, while WTI crude prices were lower by 0.30 per cent at 66.32, as of 3:35 PM IST.