The Indian Rupee extended its gains for a second straight session, closing 7 paise higher at 94.33 against the US dollar as optimism around India-US trade negotiations supported sentiment. According to PTI, the rupee opened at 94.30 against the greenback and traded in a range of 94.20-94.52 before settling higher for the day. On Thursday, the rupee had gained 10 paise to close at 94.40 against the US dollar, demonstrating sustained momentum in the currency's recovery. Forex traders said the domestic currency drew support from expectations that negotiations on an interim trade agreement between India and the US could gather pace in the coming days. However, gains remained limited as investors continued to monitor developments surrounding the proposed US-Iran peace process.
The Indian Rupee gained 6 paise to close at 94.34 against the US dollar on Friday, driven by optimism over U.S.-India trade negotiations. According to The Hindu, the rupee opened at 94.30 against the dollar and traded in the range of 94.20-94.52 before settling higher for the day. Indian Foreign Secretary Vikram Misri on Thursday said trade featured prominently in discussions between Prime Minister Narendra Modi and US President Donald Trump, with both sides asking negotiators to expedite efforts to conclude the proposed trade pact. Misri's remarks came a day after Modi and Trump held wide-ranging discussions on the sidelines of the G7 Summit, their first such interaction in 16 months. Significant progress has been made on the conclusion of the interim trade pact and US Trade Representative Jamieson Greer is scheduled to visit India next week to advance the negotiations. The rupee's gains came despite initial pressure from a firming dollar index and rising crude oil prices that weighed on investor sentiments throughout the session.
A further decline in oil prices provided significant support to the rupee's sustained recovery, with Brent crude declining 0.65% to $79.33 per barrel in futures trade. As per CNBC TV18, the price of Brent Crude steadied at the low levels of under $80 per barrel, further aiding the Indian currency. Amit Pabari, MD, CR Forex Advisors, noted that lower oil prices reduce India's import bill, ease inflation concerns and lower structural demand for dollars. Dilip Parmar, Research Analyst at HDFC Securities, emphasized that the rupee remains the lead performer among its Asian peers, energised by a resurgence of capital inflows and cooling oil prices. According to Reuters, although activity currently leans more toward importers' hedging, they saw a rise in inflows into Indian bonds, a slowdown in outflows of foreign stock, and more two-way activity from importers and exporters. This represents a change from the one-way dollar demand that has kept the rupee under pressure for a number of weeks.
The rupee's recovery came despite initial pressure from Federal Reserve policy expectations, with the currency having dropped to 94.70 at the open pressured by a jump in U.S. yields triggered by expectations that the Federal Reserve will raise rates at least once this year. Nine of the 18 Fed policymakers pencilled in a rate hike, far more than analysts had anticipated, with the odds of a hike as soon as next month rising to about 25%. However, markets have significantly revised their Federal Reserve rate hike expectations following the latest policy statement, with markets now pricing in 32 basis points of rate hikes this year and a cumulative 42 bps by this time next year. The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.08% lower at 100.76, lower by 0.08% on Friday, holding at a one-year high. Dilip Parmar from HDFC Securities expects the local rupee to march toward 94 on the back of dollar inflows, with technical analysis showing the USDINR spot boxed between a crucial resistance at 94.90 and firm support at 94.10.
Asian currencies traded mixed against the US dollar, with the Japanese Yen emerging as the strongest performer, appreciating 0.174%, followed by the South Korean Won, which gained 0.125%. The Singapore Dollar also edged higher by 0.008%, indicating stable market conditions. On the weaker side, the Philippine Peso recorded the steepest decline, falling 0.323%, while the Indonesian Rupiah lost 0.180%. The Chinese Renminbi weakened 0.106%, the Taiwan Dollar slipped 0.028%, whereas the Thai Baht and Malaysian Ringgit remained largely flat, declining marginally by 0.009% and 0.007% respectively. Market sentiment turned cautious after reports that US Vice President JD Vance postponed his planned visit to Switzerland for talks with Iranian negotiators, with the White House citing logistical reasons. On the domestic equity front, benchmark indices ended sharply lower, with the Sensex falling 607.08 points to close at 76,802.90 and the Nifty dropping 154.90 points to settle at 24,013.10. Foreign institutional investors (FIIs) turned net buyers during the session, purchasing equities worth ₹4,859.07 crore, according to exchange data.
