Rupee Falls 6 Paise to 90.62 Against US Dollar in Early Trade
Forex traders have observed that initial enthusiasm regarding the India-US trade deal has waned as concerns arose following the White House’s fact sheet release. The rupee fell by 6 paise, reaching 90.62 against the US dollar in early trading on Wednesday. This decline was influenced by ongoing geopolitical tensions and increased dollar demand from importers, which detracted from investor confidence.
Key Insights on the Rupee’s Performance
– Opening Rates: The rupee started trading at 90.56 against the US dollar but later slipped to 90.62, marking a 6 paise depreciation from the previous closing.
– Intraday Fluctuations: During preliminary trading, the rupee even peaked at 90.46 against the American currency.
– Latest Trading Session: On Tuesday, the rupee reversed earlier losses, closing 10 paise higher at 90.56 against the US dollar.
Impacts of the India-US Trade Deal
– The fact sheet outlines crucial elements of the agreement, including provisions for India to eliminate or reduce tariffs on all US industrial goods and various food and agricultural products. This list includes:
– Dried distillers’ grains
– Red sorghum
– Tree nuts
– Both fresh and processed fruits
– Additionally, India pledged to purchase over USD 500 billion of US energy, information technology, agriculture, coal, and other products.
– Notably, the US document goes further than the previous February 6 joint statement by specifying tariff reductions on sensitive products like certain pulses, which hold significant political and economic implications for India, according to Amit Pabari, MD of CR Forex Advisors.
Future Projections for the Rupee
– Pabari notes that the 90.00-90.20 range is currently acting as strong support for the rupee. As long as this zone holds firm, there is potential for the USD/INR pair to inch upward, with the 91.00-91.20 range becoming the next possible target in future trading sessions.
Current Market Trends
– The dollar index, which measures the US dollar’s strength against a basket of six currencies, was trading 0.14 percent lower at 96.66.
– Brent crude, a global oil benchmark, rose by 0.78 percent, reaching USD 69.34 per barrel in futures trading. Given that India is a significant oil-importing nation, rising crude prices can lead to a heavier import bill, which typically pressures the rupee, albeit gradually.
Stock Market Performance
– On the domestic equity front, the Sensex gained 141.21 points to reach 84,415.13 in early trading, while Nifty advanced by 51.95 points to 25,987.10.
– According to exchange data, foreign institutional investors purchased equities worth Rs 69.45 crore on Tuesday.
In conclusion, the recent depreciation of the rupee to 90.62 against the US dollar underscores the complexities faced by forex traders amid fluctuating market dynamics. Ongoing geopolitical tensions and the detailed terms of the India-US trade deal have significant implications for the currency’s stability and future performance.