Mumbai: The rupee gained 11 paise to 91.57 against the US dollar in early trade on Wednesday, supported by a retreating dollar index and the landmark India-EU trade deal. Forex traders said the rupee opened higher as the US dollar index softened and a long-awaited trade breakthrough with Europe offered quiet reassurance.
At the interbank foreign exchange market, the rupee opened at 91.60 against the US dollar, then gained some ground to 91.57, registering a gain of 11 paise over its previous close. On Tuesday, the rupee rebounded from its all-time low levels and gained 22 paise to close at 91.68 (provisional) against the US dollar. In the initial trade, it also touched 91.66 against the American currency.
"The 92.00 level remains the key near-term pivot for USD/INR. A sustained move above this zone could open the way toward the 92.20–92.50 range," CR Forex Advisors MD Amit Pabari said. Pabari further added that continued RBI presence in the market, combined with a softer dollar backdrop, may help stabilise the pair and gradually pull it back toward the 90.80–91.00 zone in the near term.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.13 per cent lower at 96.09. Brent crude, the global oil benchmark, was trading 0.53 per cent higher at USD 67.93 per barrel in futures trade. On the domestic equity market front, the 30-share benchmark index Sensex jumped 646.49 points to 82,503.97 in early trade, while the Nifty surged 196.7 points to 25,372.10.
Foreign Institutional Investors offloaded equities worth Rs 3,068.49 crore on Tuesday, according to exchange data. Meanwhile, India and the European Union on Tuesday announced the conclusion of negotiations for the free trade agreement (FTA), under which a number of domestic sectors such as apparel, chemicals and footwear will get duty-free entry into the 27-nation bloc, while the EU will get access to the Indian market at concessional duty for cars and wines, an official said.
The deal has been dubbed the "mother of all deals" as it will create a market of about 2 billion people. "This agreement follows recent trade pacts with Britain, New Zealand, and Oman. While challenges remain - especially with high US tariffs on Indian exports - the EU deal sends a strong signal of India's growing role in global trade," Pabari added.
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