Rupee Gains 34 Paise to Reach 84.96 Against US Dollar
The Indian rupee gained 34 paise to 84.96 against the US currency in early trade on Friday, as a sliding greenback and a steep fall in global crude prices supported it. The recovery comes amidst global markets reacting to the economic fallout of the latest batch of tit-for-tat tariffs slapped by erstwhile US President Donald Trump.
The rupee at the interbank foreign exchange opened higher at 85.07 and rose to 84.96, up by 34 paise from Thursday's closing price of 85.30. On Thursday, the rupee had also increased by 22 paise as improving global sentiment following easing demand for the US currency after the tariff move by Trump helped sentiment.
Forex experts link the rupee's appreciation to the broad weakness of the US dollar. The dollar index, which reflects the strength of the greenback relative to a basket of six major currencies, fell 0.42% to 101.64. Traders added that the greenback was pressured by rising inflation fears in the US, following the imposition of import tariffs on some 60 countries, and concern over a potential recession.
Amit Pabari, Managing Director of CR Forex Advisors, said, "Although tariffs are intended to increase US revenues, they will likely have a contrary effect. Increased import costs will burden consumers heavily, diminishing overall economic activity".
Adding to the strength of the rupee, Brent crude futures fell 0.84% to USD 69.55 a barrel, offering a relief to oil-importing nations such as India. According to analysts, India's comparatively benign exposure to fresh tariffs at an effective rate of 27% far lower than China and Vietnam is said to have cushioned the rupee from wider volatility.
But the domestic equity markets also mirrored the skeptical investor sentiment. BSE Sensex fell 594.05 points to 75,701.31, and NSE Nifty dipped 239.85 points to 23,010.25. On the FII front, FIIs sold equities worth Rs 2,806 crore on Thursday, based on exchange data.
Even though there are concerns from the equity markets, currency experts think that the rupee could still find short-term support from a soft dollar and declining oil prices.
