Rupee rises 21 paise in early trade as India-US interim trade pact boosts sentiment
The rupee strengthened 21 paise to 90.44 against the US dollar in early trade on Monday, buoyed by positive sentiment after India and the US reached a framework for an interim trade pact, alongside firm equities and a weaker dollar.
Mumbai: The rupee gained 21 paise to 90.44 against the US dollar in early trade on Monday, supported by positive sentiments after India and the US reached a framework for an interim trade pact.
Forex traders said the rupee opened on a lower note, but soon gained the lost ground and was trading on a positive note after India and the US on Saturday announced they have reached a framework for an interim trade agreement under which both sides will reduce import duties on a number of goods to boost two-way trade. Moreover, a retreating dollar index and a positive trend in domestic equities further supported investor sentiments.
At the interbank foreign exchange market, the rupee opened at 90.66 against the US dollar, then gained some ground to touch 90.44, registering a gain of 21 paise over its previous close.
On Friday, the rupee declined 31 paise to settle at 90.65 against the US dollar. In the initial trade, it also touched 90.70 against the American currency.
“RBI continues to act from both sides of the market selling dollar on good upticks thus keeping a tab on the excessive depreciation while it has also kept a tab on the appreciation after the US-India deal was announced and on Saturday the terms of reference were declared buying dollars near to 90.05 levels,” said Anil Kumar Bhansali Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
While the US will reduce tariffs on Indian goods to 18 per cent from the present 50 per cent, India will eliminate or cut down import duties on all US industrial goods and a wide range of American food and agricultural products, including dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits.
According to a joint statement issued by both sides, India has expressed its intention to purchase USD 500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05 per cent lower at 97.58.
Brent crude, the global oil benchmark, was trading 0.94 per cent lower at USD 67.41 per barrel in futures trade.
On the domestic equity market front, Sensex jumped 415.97 points to 83,996.37 in early trade, while the Nifty was up 126.05 points to 25,819.75.
Foreign Institutional Investors purchased equities worth Rs 1,950.77 crore on Friday, according to exchange data.
Meanwhile, India’s forex reserves jumped by another USD 14.361 billion to a new all-time high of USD 723.774 billion during the week ended January 30, the Reserve Bank said on Friday.
In the previous reporting week, the forex kitty had increased by USD 8.053 billion to USD 709.413 billion, surging past the earlier all-time high of USD 704.89 billion recorded in September 2024.
