Rupee rebounds 20 paise to 94.20 on hopes of India-US trade deal
Rupee began Friday on a strong note, rising 20 paise against the US dollar in early trade. The currency rose to 94.30 against the greenback in the interbank foreign exchange market before strengthening further to 94.20. The gain comes after Rupee had settled at an all-time closing low in the previous session. Optimism surrounding an India-US trade agreement helped the currency recover from its record closing low, with the domestic currency rising 20 paise against the US dollar in early trade on Friday.Market participants attributed the recovery to improving foreign inflows and softer crude oil prices, which continued to lend support to the local currency. Forex traders said the broader sentiment towards the rupee remained positive.The movement in the currency also coincided with renewed momentum in trade discussions between India and the United States. Foreign secretary Vikram Misri said on Thursday that trade figured prominently in talks between Prime Minister Narendra Modi and US President Donald Trump, with both leaders asking negotiators to expedite work on the proposed trade agreement.Misri said considerable progress had already been achieved on the interim trade pact. He added that US trade representative Jamieson Greer is expected to visit India next week to continue the negotiations.The comments followed a meeting between PM Modi and Trump on the sidelines of the G7 Summit, marking their first wide-ranging discussions in 16 months. The talks were aimed at rebuilding bilateral ties that had come under strain.Meanwhile, analysts said the Reserve Bank of India could use the recent inflow of dollars to strengthen its reserve position.“The RBI is expected to use incoming dollar flows to rebuild forex reserves and gradually reduce its large forward dollar book, estimated at around USD 110 billion. Market participants believe the central bank may have already purchased USD 3–5 billion over the last two sessions,” CR Forex Advisors MD Amit Pabari told PTI.Pabari further said that this is not a sign of concern. Rather, it reflects the RBI taking advantage of favourable market conditions. “However, such buying can naturally slow the pace of rupee appreciation, making the move stronger but more gradual,” he said.Globally, the dollar index edged up 0.08% to 100.92. Brent crude futures, however, declined 0.85% to $79.17 per barrel, offering support to emerging market currencies including the rupee.Domestic equities traded lower despite the currency’s gains. The Sensex fell 786.58 points to 76,624.90 in early trade, while the Nifty slipped 210.95 points to 23,959.80. According to exchange data, foreign institutional investors remained net sellers on Thursday, offloading equities worth Rs 1,025.20 crore.
