MUMBAI: The Indian rupee fell on Thursday, weighed down by persistent interbank dollar demand, but pared losses after President Donald Trump said that India had offered a zero-tariff trade deal to the United States.
The rupee closed at 85.55 against the U.S. dollar, down 0.3% on the day but above its intraday low of 85.7225.
The rupee rose above 85.50 in an immediate reaction to Trump’s comments but thereafter bids from foreign and local banks picked up, a trader at a Mumbai-based bank said.
The dollar bids were likely spurred by corporate demand and modest portfolio outflows, the trader said.
The dollar-rupee overnight swap rate also dipped, pointing to heightened demand for cash dollars, which typically indicates a pick up in outflows.
India’s benchmark equity indexes, the BSE Sensex and NSE Nifty 50, rose about 1.5% with sentiment boosted by Trump’s remarks.
The United States is India’s largest trading partner, with bilateral trade totalling some $129 billion in 2024.
New Delhi has sought to clinch a trade deal with the U.S. within the 90-day pause announced by Trump on April 9 on tariff hikes for major trading partners.
India’s trade data for the month of April is due after the local currency market closes.
Investors also await remarks from Federal Reserve Chair Jerome Powell as well as U.S. economic data for cues on the future trajectory of Fed policy rates and the dollar.
The dollar index may find near-term support around 100.20 to 100.25 but a fall below that could prompt it to give back more of its recovery over the last three weeks, ING Bank said in a note.
Comments
Comments are closed for this article.