The rupee staged a strong comeback on Thursday, strengthening by 7 paise against the dollar after weakening by nearly 25 paise in morning trade. Gains were driven by the view that US tariffs were less severe than feared. The fall in crude oil prices and weakening of the dollar index also helped the rupee rebound.
The greenback weakened against its major peers after President Donald Trump unleashed reciprocal tariffs on around 60 countries. The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 1.65% lower at 102.09.
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“For India, tariffs seem to be still moderate compared to other economies like China, Vietnam and Bangladesh which act as major rivals to India when it comes to exports. Thus, the rupee only saw a knee-jerk depreciation. Later, it started appreciating to 85.45 levels,” said Kunal Sodhani, vice president – treasury, Shinhan Bank. “For the rupee, 84.80 now is an important support while 85.85 is a major hurdle to cross.”
Experts say India is facing a relatively softer levy than regional peers such as China, Vietnam and Thailand also was a sentimental positive for the currency.
At the interbank foreign exchange, the rupee opened at 85.7525 and touched an intraday high of 85.42 and a low of 85.765 against the greenback. It closed at 85.44.
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However, the local currency is likely to come under pressure in the medium term. “In the near term, we expect the rupee to remain range bound amid relatively lesser impact of tariff versus other countries. However, with fading impact of the positive seasonality from April, the rupee is likely to have a bias to weaken,” said Anubhuti Sahay, head – India, economics research, Standard Chartered Bank. “We remain watchful of CNY (Chinese yuan) trajectory amid large tariff increases, as a weaker CNY can put pressure on the rupee, especially as the size of the forwards book with the RBI still remains large”.
Brent crude, the global oil benchmark, fell nearly 7% intra-day to $70.37 per barrel in futures trade.
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