Indian rupee drops 17 paise to 90.11 vs USD on Thursday due to import demand and risk-averse sentiment; trade talks may influence near-term movement.
The Indian rupee dropped by 17 paise, reaching 90.11 against the US dollar in early trading on Thursday. This movement was attributed to risk-averse market sentiment and heightened demand for US dollars from importers, which negatively impacted investor confidence.
Forex traders anticipate the rupee will likely exhibit a negative trajectory, influenced by subdued domestic market activity and continued outflows of foreign investment.
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Furthermore, investors are also monitoring developments in the US-India trade negotiations, which could potentially strengthen the rupee in the near future.
In the interbank foreign exchange market, the rupee commenced trading at 89.95 against the US dollar. Subsequently, it depreciated, reaching 90.11 relative to the US currency, thereby reflecting a decline of 17 paise from its preceding closing value.
On Wednesday, the rupee closed at 89.87 relative to the United States dollar.
The U.S. trade delegation has indicated that they have received India’s most favorable proposal, which could potentially benefit the rupee. However, the overall impact may diminish due to short positions once the trade agreement is finalized, according to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
United States Trade Representative (USTR) Jamieson Greer indicated that the United States has received highly favorable proposals from India regarding the prospective trade agreement, concurrent with the commencement of bilateral discussions in the city.
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During testimony before a Senate Appropriations Subcommittee hearing held in Washington on Tuesday, Greer indicated that some Indian entities are exhibiting reluctance toward specific row crops, along with other livestock and related products. The principal row crops cultivated in the United States comprise maize, soybeans, wheat, and cotton.
These observations are significant, given the ongoing efforts of both parties to finalize the initial phase of the proposed Bilateral Trade Agreement (BTA).
The USD/INR trading range for today is projected to be between 89.70 and 90.20. Furthermore, according to Bhansali, Foreign Portfolio Investors (FPIs) continue to exhibit a selling bias within the Indian market.
Concurrently, the dollar index, which assesses the U.S. dollar’s value relative to a group of six currencies, experienced a 0.15 percent decrease, reaching 98.63, following the Federal Reserve’s interest rate reduction and less-than-aggressive forward guidance.
In futures trading, Brent crude, the international oil benchmark, experienced a 0.22 percent increase, reaching USD 62.35 per barrel.
In the domestic equity market, the 30-share benchmark index, Sensex, experienced an increase of 80.15 points, reaching 84,471.42. Simultaneously, the Nifty advanced by 34.40 points, closing at 25,792.40.
According to exchange data, Foreign Institutional Investors offloaded equities valued at Rs 1,651.06 crore on Wednesday.