Currency Market News: Rupee gains 12 paise to 85.42 against US dollar

Currency Market News: Rupee appreciated 12 paise to 85.42 against the US dollar in early trade on Friday, supported by robust foreign institutional investor (FII) inflows and a weakening dollar index.

However, gains were capped due to the widening trade deficit, a weak start in the domestic equity markets, and a rise in Brent crude prices, according to forex traders.

At the interbank foreign exchange, the local unit opened stronger at 85.28 against the greenback, before slipping slightly to 85.42, still up by 12 paise from its previous close. On Thursday, the rupee had depreciated 22 paise to settle at 85.54 against the US dollar.

“Rupee is expected in a narrow band of 85.25-75 with exporters expected to sell the upticks and importers to wait for medium term hedging… RBI may have been present yesterday (Thursday) at 85.75 levels,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

Also Read:Currency Market News: Rupee rebounds 16 paise to 85.29 against US dollar

Dollar index slips, Brent crude inches up 

The dollar index, which measures the US currency’s strength against a basket of six major currencies, was down 0.24 per cent at 100.641.

“The dollar index fell to 100.64 as the US 10-year yield fell to 4.4260 per cent after downside surprises from US data this week cemented bets that the FED will cut rates more than three times this year. The US-China trade truce took the dollar index higher but the euphoria fizzled out soon and left the dollar index down,” Bhansali added.

Brent crude, the global benchmark, rose 0.14 per cent to $64.62 per barrel in futures trade.

India’s exports rose 9.03 per cent to $38.49 billion in April, the highest in six months, driven by robust performance in electronics and engineering goods. However, imports surged 19.12 per cent year-on-year to $64.91 billion due to higher crude oil and fertiliser shipments, widening the trade deficit to a five-month high of $26.42 billion.

Also Read:First Trade: Indices open lower, Nifty holds on to 25,000 levels; Crompton Greaves up 4% 

Stock market summary

On the equities front, Indian markets, which touched the 25,000-mark for the first time in the previous session, opened lower on Friday. The Nifty slipped 0.13 per cent but held above the 25,000 level, while the Sensex declined 0.27 per cent or 224 points to 82,307.

Foreign institutional investors (FIIs) were net buyers, purchasing equities worth Rs 5,392.94 crore on Thursday, according to exchange data.

(With inputs from PTI)