Rupee posts best week since Jan 2023 as oil prices slide; ends below 85.5/$

Indian Rupee today: The domestic currency closed 22 paise higher at 85.49, a day after closing at 86.71 against the dollar

The Indian rupee strengthened for the second consecutive day on Friday, supported by likely inflows from global funds and a weaker dollar index.

 

The domestic currency closed 22 paise higher at 85.49, a day after closing at 86.71 against the dollar, according to Bloomberg. The currency has depreciated by around 0.1 per cent so far this month, making it one of the worst-performing Asian currencies.

 

On a weekly basis, the currency saw its best week since January 2023, driven mainly by a plunge in crude oil prices amid Iran-Israel conflicts.  

 

Rupee traded strong as the dollar index continued its weak trend below the 97 mark, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. The rupee has strengthened over the last few sessions, supported by easing tensions in West Asia and a sharp 12-14 per cent drop in crude prices, he said. 

 

   

"Going ahead, the market will look for cues from the upcoming Fed policy and inflation data. Today’s Core PCE Price Index from the US is being closely tracked by participants for direction on dollar movement." 

 

Inflows dominated outflows yesterday, lifting the rupee by 38 paise, and a similar trend is anticipated today, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "However, potential outflows from oil payments, Reserve Bank of India (RBI) dollar purchases, and global funds buying may cap gains." 

 

A significant outflow of around $1 billion could also occur due to JSW Paints’ acquisition of Akzo Nobel, Bhansali said, adding that the final day of the HDB Financial issue could trigger additional inflows. 

 

The dollar index was slightly higher driven by hopes for a rate cut by the US Federal Reserve. The first quarter consumer spending grew at the weakest pace since the pandemic. The US dollar index, which measures the greenback against a basket of six major currencies, was up 0.10 per cent at 97.24.

 

On Thursday, White House Press Secretary Karoline Leavitt said that US President Donald Trump could extend the July 9 deadline to impose reciprocal tariffs in a bid to secure deals with other trading nations. This sent the equity market higher on Wall Street. 

 

Meanwhile, crude oil prices were headed for weekly losses as concerns over West Asia cleared after the Iran-Israel ceasefire. Brent crude price was up 0.69 per cent at $68.20 per barrel, while WTI crude prices were higher by 0.74 per cent at 65.72, as of 3:35 PM IST.