Mumbai: The Indian rupee strengthened to 87.22 against the US dollar at open on Monday following a volatile week after continued FII selling and US President Donald Trump’s 25 per cent tariff announcement on the country.
The Indian rupee opened higher as a result of the decline in the dollar index and rise in Asian currencies.
The local currency opened at 87.22 against the US dollar, up 32 paise from Friday’s close of 87.54. The dollar index approached 100, causing the rupee to fall 100 paise, closing at 87.52 per dollar on August 1, down from 86.52 per dollar on July 25 and a low of 87.73 during the week.
Last week, rupee had fallen for the fourth consecutive week in a row as FIIs continued to sell Indian equities and oil prices rose. FIIs continued their selling spree for the fifth week in a row, and the total FII sales for July stood at Rs 47,666 crore.
Traders expect the rupee to trade between 87.00 and 87.50 for the day and between 87.00 and 87.80 this week and expect central bank to continue intervention to limit excessive volatility.
This week, the rupee is likely to remain under pressure due to lingering concerns over steep US tariffs on Indian exports. The Reserve Bank of India’s upcoming policy decision on August 6 also plays a part.
Meanwhile, the odds of the US Fed cutting rates in September increased to 80 per cent after data released on Friday showed that the US economy added fewer jobs than expected, while the unemployment rate rose to 4.2 per cent. The slowdown in US job additions in July led to the dollar index falling 1.35 per cent on Friday, its worst day since mid-April.
Brent oil prices fell to $ 69.54 per barrel as OPEC+ agreed for a production hike in September, while concerns over a cooling US economy and trade tariffs also weighed.
India’s 10-year benchmark 6.33 per cent 2035 bond yield, settled at 6.3680 per cent last week, up 2 basis points (bps). Traders expect the yield to stay between 6.33 per cent and 6.38 per cent till RBI policy decision. Some market participants expect RBI to cut rates by 25 bps, while HSBC Research said RBI will keep rates unchanged.
India’s retail inflation fell to a more-than-six-year low in June, and forecasts indicate that it will drop to a record low in July, which raises hopes for a rate cut.
(IANS)
