Rupee opened 23 paise stronger, by renewed trade discussions between India and the United States
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MUMBAI — The Indian rupee opened 23 paise stronger on Wednesday, trading at 87.82 against the US dollar buoyed by renewed trade discussions between India and the United States.
The rupee closed yesterday at 88.09 after appreciating 7 paise intraday. Today's opening marked the rupee's first opening below 88 in two weeks.
Analysts said that the rupee is likely to face resistance around 88.20. Despite support from bilateral trade talks, a decisive break below 87.90 could open the way toward 87.50 or to 87.20, they said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 96.73, higher by 0.11 per cent. Brent crude was trading 0.20 per cent lower at $68.33 per barrel in futures trade.
Emerging market currencies gained support as softness in the dollar increased amidst reports that the US is on the verge of a recession phase. Mark Zandi, chief economist at credit rating agency Moody's, has recently said that the state-level data in the United States shows that the country is "on the edge of recession”.
The US economy is very close to a recession, based on data about spending, jobs, and manufacturing, he said, adding that he is worried about US tariffs hurting American companies' profits and ongoing troubles in the US housing market.
Further, the analysts also attributed the rupee's rise to renewed optimism over bilateral trade talks, potentially enhancing investor confidence and economic relations between the two countries.
Market sentiment, however, remained cautious despite positive movement. Investors are closely watching the US Federal Reserve’s policy meeting, with an interest rate cut anticipated. The Fed's position may impact global capital flows and currency values, marking a critical time for traders.
Analysts indicated that a surprise in rate direction may lead to increased volatility. A dovish commentary may lead to further decline in the greenback while a hawkish tone may lead to a pullback.