The rupee gave a strong reply to Trump; no one had expected such a rise
At the interbank foreign currency exchange market, the rupee opened at 90.15 against the US dollar, down 10 paise from its previous close. The domestic currency recovered from its losses and ended the day on a positive note at 89.88 (provisional) per dollar, up 17 paise from its previous close.
The rupee's decline isn't just due to selling by foreign investors, but also due to Trump's tariffs, which have significantly damaged the rupee. At one point, the value of one dollar was hovering around 83, but due to the Trump tariffs, it crossed 90.
Trump also threatened India with tariffs on Tuesday morning. This time, the target was the country's basmati rice. This led to losses for the rupee against the dollar during the initial trading session. However, by the time the market closed, something happened that is hard for anyone to believe.
In fact, the rupee reversed its 10-paisa decline on Tuesday morning to close with a gain of 17 paise, delivering a strong response to Trump's tariffs. This has led to the rupee strengthening against the dollar, falling below 90 rupees.
According to experts, the Federal Reserve meeting begins on Tuesday, which could result in a 25-basis-point policy rate cut, which appears to be supporting the rupee. Let us also tell you what kind of data is being seen in the currency market.
Rupee appreciates
The rupee recovered from its initial losses to close 17 paise higher at 89.88 (provisional) against the US dollar on Tuesday, supported by a fall in the US dollar and crude oil prices from their highs.
Foreign currency traders said the rupee found support at lower levels from a weakening US dollar overseas amid expectations of an interest rate cut by the US Federal Reserve in December.
However, a decline in domestic stock markets and foreign capital outflows weighed on investor sentiment, limiting the rupee's strength.
Furthermore, investors are in a wait-and-see mode, and market participants are awaiting clarity from the US Federal Reserve before taking a decisive stance.
At the interbank foreign currency exchange market, the rupee opened at 90.15 against the US dollar, down 10 paise from its previous close.
The domestic currency recovered from its losses and ended the day on a positive note, closing at 89.88 (provisional) per dollar, up 17 paise from its previous close. The rupee closed at 90.05 against the US dollar on Monday.
Dollar index and crude oil prices fall
- Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.10 per cent lower at 98.98.
- In the international market, Gulf countries' crude oil Brent crude futures was trading at $62.33 per barrel, down 0.27 percent.
- Forex traders say investors' attention is now focused on the Fed's policy outcome on December 9-10. Markets are projecting a nearly 90 percent chance of a rate cut next week.
- Meanwhile, India and the US will begin three-day talks on the first phase of their proposed bilateral trade deal here from December 10.
- In the domestic stock market, the Sensex fell 436.41 points to close at 84,666.28, while the Nifty fell 120.90 points to close at 25,839.65.
- According to exchange data, foreign institutional investors sold shares worth Rs 655.59 crore on Monday.
Why did the rupee appreciate?
Anuj Chaudhary, research analyst at Mirae Asset Sharekhan, said the rupee recovered from lows on possible RBI intervention and an overnight drop in crude oil prices.
However, weak domestic markets and a slight improvement in the US dollar index capped the sharp gains. He said the US dollar is also expected to remain weak due to expectations of a Fed interest rate cut in December.
Any further intervention by the central bank could support the rupee. The spot US dollar-Indian rupee price is expected to remain between ₹89.50 and ₹90.30.