Mumbai: The rupee rose 10 paise to 87.59 against the US dollar in early trade on Thursday, supported by a weaker dollar index and easing Brent crude prices. Besides, the Reserve Bank of India (RBI) stepped in to protect the local unit from crossing its all-time low, further supporting the local unit, according to forex traders.
However, FII outflows and weaker domestic equity markets prevented sharper gains in the local unit as an additional 25 per cent US tariffs on Indian products kicked in on Wednesday. At the interbank foreign exchange, the rupee opened at 87.56 against the greenback before slipping to 87.59, registering a gain of 10 paise from its previous close. The rupee depreciated 13 paise to close at 87.69 against the US dollar on Tuesday.
Equity and forex markets remained closed on Wednesday on account of Ganesh Chaturthi. "The rupee opened higher as the Reserve Bank of India again protected the rupee from crossing its all-time low by selling dollars at 87.80 on Tuesday. Exporters are expected to sell dollars at 87.80 for hedging, while importers may buy the same on all dips for near-term imports payments," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
A range of 87-88 continues with a glimmer of chance of the rupee moving to 86.50 in the medium term, he said. Brent crude, the global oil benchmark, was trading 0.76 per cent lower at USD 67.53 per barrel in futures trade. "Brent oil prices fell in Asian trading on Thursday after US data showed a lower-than-expected drop in crude inventories, while investors weighed the impact of additional US tariffs against India," Bhansali said.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.16 per cent to 98.07. "The dollar index fell as US President Donald Trump's unprecedented move to fire FED Governor Lisa Cook renewed concerns over the Central Bank's independence," Bhansali added. On the domestic equity market front, the Sensex tanked 508.16 points to 80,278.38 in early trade, while the Nifty was down 157.35 points to 24,554.70. Foreign Institutional Investors offloaded equities worth Rs 6,516.49 crore on Tuesday, according to exchange data.
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