Mumbai: The rupee appreciated 14 paise to 87.95 against the US dollar in early trade on Tuesday, tracking a positive trend in domestic equities even as concerns over US tariffs on India weighed on the domestic unit.
Forex traders said the rupee is likely to remain under pressure on worries over US tariffs on India and global uncertainty. Moreover, recent record lows for the domestic unit are prompting a possible RBI intervention to cap the losses in rupee, they said.
At the interbank foreign exchange market, the rupee opened at 87.98 against the US dollar, then touched 87.95, registering a gain of 14 paise from its previous close. On Friday, the rupee touched the lowest-ever intraday level of 88.38 but pared all losses before ending 3 paise higher at Rs 88.09 against the US dollar. The unit had recorded its all-time low closing level of 88.15 against the dollar on September 2.
The forex market was closed on Monday, as the Maharashtra government had declared a public holiday on account of Eid-e-Milad on September 8, instead of September 5. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 97.40, lower by 0.05 per cent, after the US NFPR disappointed while the unemployment rate rose to 4.3 per cent paving the way for the FED rate cut and with some market participants also predicting a 50 bps rate cut on September 17th, when the FOMC meets.
"Looking ahead, the spotlight will firmly be on US inflation data (CPI) for August, due Thursday. A softer reading would strengthen the case for larger rate cuts, keeping the dollar under pressure. On the other hand, any upside surprise in inflation could complicate the Fed’s path, injecting fresh volatility into the dollar’s trajectory," CR Forex Advisors MD Amit Pabari said.
Brent crude, the global oil benchmark, was trading 0.53 per cent higher at USD 66.37 per barrel in futures trade. "While softer US data and potential Fed policy shifts could provide some support to the rupee, India’s trade and tariff headwinds may cap any recovery, keeping upside risks intact," Pabari added.
On the domestic equity market front, Sensex rallied 366.87 points to 81,154.17 in early trade, while Nifty climbed 101.35 points to 24,874.50.
Foreign Institutional Investors offloaded equities worth Rs 2,170.35 crore on Monday, according to exchange data.
Meanwhile, In a fresh outburst, White House trade advisor Peter Navarro on Monday said India "must come around" at some point on trade negotiations with the US or else it "won't end well" for Delhi.
Navarro, in an interview with the ‘Real America’s Voice’ show, said the Indian government takes offence to him and described India as the ‘Maharajah’ of tariffs.
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