Following talks of a trade deal with the U.S., the rupee showed mild strength, but investors remain cautious, waiting for official confirmation and solid agreements.
Rupee vs Dollar: Investors Stay Cautious
On Thursday, the rupee gained slightly, rising seven paise to 90.40 per dollar. However, this increase remained limited as no official, signed documents of the India-U.S. trade deal have been released yet. As a result, the forex market has shifted from a “celebration mode” to a “verification mode.” In other words, traders are no longer relying solely on statements—they are waiting for concrete terms and written agreements.
Market Moves Amid Celebration Mode
In the interbank forex market, the rupee opened at 90.52 per dollar and strengthened slightly to 90.40 during trading. It had closed at 90.47 on Wednesday. Still, the rupee’s gains were limited due to continuous corporate demand for dollars and global market pressures.
The U.S. Dollar Index, which measures the dollar’s strength against six major currencies, rose 0.18% to 97.79. Consequently, emerging market currencies came under pressure.
Domestic equity markets also showed weakness. In early trading, the Sensex fell about 279 points to 83,538.97, while the Nifty slipped 94 points to 25,681.85. Experts say investors are avoiding risks for now, waiting for signals from the Reserve Bank of India (RBI) Monetary Policy Committee. Friday’s RBI announcement will clarify the future interest rate trajectory, directly affecting both the rupee and stock markets.
Crude Oil Price Drop and Its Impact on Rupee
On the international front, falling crude oil prices offered some relief for the rupee. Brent crude, the global benchmark, dropped nearly 2% to $68.07 per barrel. However, analysts warn that any sharp rebound in oil prices could quickly limit the rupee’s gains, since India imports a large portion of its oil requirements.
Expert Insights: Trade Deal and Rupee Outlook
Anuj Chaudhary, research analyst at Mirae Asset Sharekhan, said weaker-than-expected services PMI data put pressure on the rupee. He noted that hopes around the India-U.S. trade deal had driven record gains in the rupee earlier in the week. However, volatility in crude oil prices and global economic cues prevented these gains from sustaining.
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Chaudhary believes that as the trade deal terms become clearer, and if they favor India, domestic market sentiment will improve. Consequently, the rupee could see a positive medium-term trend.
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