Rupee rebounds 49 paise to 89.17 after record fall, market eyes India-US trade deal

The Indian rupee gained 49 paise to 89.17 against the US dollar on Monday, aided by equity market gains, RBI intervention, and falling crude prices. Analysts warn of potential weakness ahead of an expected India-US trade deal by December-end.

Mumbai: The rupee rebounded on Monday from record lows, rising 49 paise to 89.17 against the greenback in early trade on US dollar selling by banks and a dip in global crude oil prices.

A positive opening in the domestic equity markets and intervention by the Reserve Bank of India (RBI) lent support to the domestic unit, according to forex traders.

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The rupee opened at 89.46 against the greenback before rising to 89.17, up 49 paise from its previous close.

The rupee plunged 98 paise to close at its lifetime low of 89.66 against the US dollar on Friday, due to a huge demand for the greenback in the domestic forex market amid widespread selling pressure in local and global equities and trade-related uncertainties.

In the steepest fall in over three years, the domestic currency nosedived 98 paise to finally settle at 89.66 against the American currency.

The previous biggest one-day fall was recorded at 99 paise against the dollar on February 24, 2022.

“Most traders believe that rupee may not cross 90 as it may remain protected for a few more weeks and expect a positive (India-US) trade deal outcome by December-end. The market is bracing for more weakness after the rupee slid to a record low on Friday,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

In the absence of a trade deal, the 90-mark doesn’t seem quite distant now, he added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was marginally up by 0.01 per cent at 100.18.

Brent crude, the global oil benchmark, was trading 0.10 per cent lower at USD 62.50 per barrel in futures trade.

On the domestic equity market front, the Sensex climbed 218.44 points to 85,450.36 in early trade while Nifty was up 69.4 points to 26,137.55.

Foreign institutional investors sold equities worth Rs 1,766.05 crore on a net basis on Friday, according to exchange data.

India’s forex reserves jumped USD 5.543 billion to USD 692.576 billion during the week ended November 14 due to a steep increase in the value of gold reserves, the RBI said on Friday.