Mumbai, July 24: The rupee appreciated 17 paise to 86.24 against the US dollar in early trade on Thursday, tracking the weakness of the American currency in the overseas market.
Forex traders said uncertainty over the India-US trade deal has been a huge overhang for the forex market, leaving the rupee trading in a tight range.
Moreover, a negative trend in domestic equities and foreign fund outflows dented investors’ sentiments and restricted the upmove of the local unit.
At the interbank foreign exchange, the domestic unit opened at 86.33 and touched 86.24 against the greenback in initial deals, higher by 17 paise from its previous closing level.
On Wednesday, the rupee settled with a loss of 3 paise at 86.41 against the dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.06 per cent to 97.15, as investors watched out for a trade deal ahead of the August 1 deadline.
Brent crude, the global oil benchmark, went up by 0.25 per cent to USD 68.68 per barrel in futures trade, on the trade optimism with US-Japan deal done and US-EU deal under talks, which could ease pressure on the global economy.
However, the uncertainty over US-China trade talks and Eluding peace between Russia and Ukraine is limiting further gains, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Bhansali further noted that despite a fall in Dollar index and rise in risk assets, Indian rupee has not been able to show any substantial gains largely due to significant dollar demand in the system.
The rupee will remain in a range of 86.10 to 86.60, Bhansali said, adding that “We need to wait and watch the developments that are happening particularly on the deal front.”
If the discussions fail or get delayed, Indian exporters could face fresh pressure — adding to the rupee’s challenges.
However, if a deal is reached, it could offer a much-needed breather. Until then, the uncertainty is likely to keep market participants cautious.
Meanwhile, in the domestic equity market, Sensex declined 124.79 points or 0.15 per cent to 82,601.85, while Nifty fell 15.75 points or 0.06 per cent to 25,204.15.
Foreign institutional investors (FIIs) offloaded equities worth Rs 4,209.11 crore on a net basis on Wednesday, according to exchange data. (PTI)
