Rupee vs dollar: Due to weakness in dollar, reduction in crude oil prices and strong domestic stock markets, the Indian rupee opened 42 paise to 85.34 against the US dollar on Tuesday.
The US Dollar index fell rapidly at a several -month low at 96.61. The concerns about the freedom of the Federal Reserve have increased amid reports of President Donald Trump considering the fed chair Jerome Powell. This political intervention panicked global investors and increased selling pressure on the dollar.
Amit Pabari, MD, CR Forex Advisors, said, “Dollar index declined due to nervousness in investors due to the impact of Trump on the Federal Fed Policy. The dollar may get support around 85.20-85.40, but due to weak local data and global uncerttics, there is a possibility of return to 86-86.50.”
Brent crude futures fell 0.5% to $ 66.40 per barrel. Lower oil prices reduce India’s import cost and help in overcoming inflation, which gives support to the rupee.
The offshore non-diligarable forward (NDF) indicated opening between 85.64 and 85.68, while earlier it was 85.7550. The onshore forward premium was 11 paise.
However, the rupee lagged behind other Asian currencies in June. While regional counterparts increased from 4% to 12%, Indian currency declined slightly, which reflects the continuous pressure of equity outflow and macro headwind.
However, currency traders pointed to the demand for dollars continuously from importers and foreign banks. A private bank businessman said, “The rupee is struggling to stand below 85.50. The demand for importers remains, and the reversal from 85.30 tomorrow reflects that pressure.”
Explain that India’s industrial production came to a 9 -month low of 1.2% on the Macro front in May, which affected the manufacturing and power sector due to early monsoon. Meanwhile, the fiscal deficit was only 0.8% of the target of FY 25, which got the support of a dividend of ₹ 2.69 lakh crore from RBI.
