Rupee rises to one-month high on weak dollar; opens stronger at 87.81/$

Indian Rupee today: The domestic currency opened 27 paise higher at 87.81 against the greenback on Thursday

The Indian Rupee climbed to its highest level in nearly a month, a day after recording its strongest single-day gain in almost four months, supported by a decline in the dollar index.

 

The domestic currency opened 27 paise higher at 87.81 against the greenback on Thursday, according to Bloomberg. The currency rose to the 87.69 level in the morning deals, but is still down 2.61 per cent so far this year. 

 

On Wednesday, the currency posted its strongest single-day gain in almost four months, since June 24. The rupee appreciated by 0.7 per cent to settle at 88.07 per dollar, up from the previous close of 88.8. 

 

 

The Rupee strengthened, supported by easing global risk sentiment and positive cues from trade discussions, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. "The Reserve Bank of India (RBI) ensured a higher opening for the Rupee, curbing speculative activity and preventing it from breaching the 88.39 level."

 

On Thursday, the currency is expected to open stronger at 87.60, with an expected range of 87.30-88.00, reflecting the RBI’s resolve to contain speculative trades that had earlier pushed the Rupee towards 88.80, Bhansali said. "Exporters are advised to sell dollars to protect hedging costs, while importers may consider buying on dips."

 

India’s trade deficit widened to a 13-month high in September, driven by a sharp rise in bullion imports, even as merchandise exports grew 6.7 per cent year-on-year (Y-o-Y) to $36.38 billion. Imports grew at a faster pace of 16.7 per cent at $68.53, resulting in the trade deficit widening to $32.15 billion during the month.

 

Meanwhile, Sanjay Malhotra, RBI governor, continued to reiterate that the central bank does not target any specific level for the rupee, and the currency value is guided by market forces and macroeconomic fundamentals. “Our effort really is to ensure that there is an orderly movement of the rupee, both sides, and any undue or any abnormal volatility is curbed,” he said while speaking at the International Monetary Fund’s Governor Talks session in Washington.

 

Domestic institutional investors (DIIs) continued to infuse funds into Indian equities, while optimism around a potential US-India trade treaty rose after US President Donald Trump praised Prime Minister Narendra Modi as a “great man.”, analysts said. 

 

The dollar index continued to weaken as traders increased bets of further Federal rate cuts and reacted to persistent US-China trade frictions. The measure of the greenback against a basket of six major currencies was down 0.30 per cent at 98.49.

 

In commodities, crude oil prices rose after Trump said Modi had vowed to halt purchases of Russian barrels. Brent crude price was higher by 0.86 per cent at 62.44 per barrel, while WTI crude prices were up 0.93 per cent at 58.81 per barrel, as of 9:07 AM IST.