Rupee Opens 17 Paise Stronger at 85.05/$ Amid Dollar Weakness
- Rupee opened 17 paise higher at 85.05/$ on Monday, following its sharpest single-day gain since November 2022.
- Gains supported by weaker US dollar and strong Asian currency performance.
- RBI transferred Rs 2.69 trillion surplus to government a key liquidity boost.
The Indian Rupee opened with gains, tracking the strength in other Asian currencies amid a softer US dollar. The local currency rose 17 paise to open at 85.05 against the US dollar, compared to Friday’s close of 85.22, according to Bloomberg. This marks its sharpest single-day gain since November 2022.
The recent uptrend follows the Reserve Bank of India's substantial surplus transfer of Rs 2.69 trillion to the government, providing a liquidity boost. While slightly below some market expectations of Rs 3 trillion, the RBI dividend is seen as a durable source of liquidity. However, its impact on the broader financial system will hinge on the pace of government expenditure.
Other Asian currencies also showed strength, with the Korean won, Thai baht, and Indonesian rupiah appreciating between 2.5% and 5.5% this month. Despite this, the rupee has still weakened 0.66% in May.
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, noted that the rupee is expected to stay steady around 85.03 on Monday, especially amid subdued global flows due to a US holiday. However, upcoming MSCI outflows and five new mainboard IPOs may introduce volatility in the sessions ahead.
The dollar index dipped 0.3% to 98.81 after US President Donald Trump extended the deadline on 50% EU tariffs to July 9, easing trade tensions. Meanwhile, crude oil prices edged up, with Brent at $64.98 and WTI at $61.72 per barrel, as of 9:22 AM IST.
Continued FII outflows Rs 4,000 crore withdrawn last week amid narrowing bond yield spreads, could still weigh on the rupee.
