Rupee slips 7 paise to 88.42 amid trade tensions and FII outflows

The rupee slipped 7 paise to 88.42 against the US dollar in Friday’s morning trade amid tariff concerns, strong dollar demand, and FII outflows. Traders expect the currency to remain under pressure despite optimism on US-India trade negotiations.

Mumbai: The rupee witnessed range-bound trading in moring deals on Friday and depreciated 7 paise to 88.42 against the US dollar, as tariff-led pressure on India’s exports and sustained foreign fund outflows dented investors sentiments.

Forex traders said the domestic unit is hovering around its all-time low level amid a recovery in the US dollar index and persistent foreign fund outflows.

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Dollar demand from importers and ongoing tariff issues between India and US also pressurised the rupee, they said.

At the interbank foreign exchange market, the rupee opened at 88.39, then lost ground and touched an early low of 88.42 against the US dollar, registering a decline of 7 paise over its previous close.

On Thursday, the rupee slumped 24 paise and closed for the day at an all-time low of 88.35 against the US dollar and had slumped to an intraday low of 88.47 against the greenback.

“With fresh record lows now marked, the near-term range for USD/INR is likely to hold between 87.90 and 88.60. The weak-dollar theme, coupled with hopes that US-India trade talks may make progress, could provide some breathing room for the rupee in the coming days. But for now, tariffs remain the overhang that markets cannot ignore,” CR Forex Advisors MD Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.10 per cent to 97.62.

Brent crude, the global oil benchmark, was trading 0.83 per cent lower at USD 65.82 per barrel in futures trade.

On the domestic equity market front, Sensex climbed 287.93 points to 81,836.66 in early trade, while the Nifty rallied 84.25 points to 25,089.75.

Foreign Institutional Investors offloaded equities worth Rs 3,472.37 crore on Thursday, according to exchange data.

Meanwhile, Commerce and Industry Minister Piysuh Goyal on Thursday said that negotiations between India and the US on the proposed trade agreement, which began in March, are progressing in a positive atmosphere and both the countries are satisfied with the progress.

These remarks follow the announcement by Trump that there will be “no difficulty” for the two countries to come to a successful conclusion in trade talks and he looks forward to speaking with his “very good friend” Prime Minister Narendra Modi in the coming weeks.