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

After a two-day losing streak, the rupee bounced back on Thursday, appreciating 16 paise to settle at 85.29 (provisional) against the US dollar, buoyed by a softer greenback and an overnight drop in global crude oil prices.

Forex traders said the recovery in the domestic currency was supported by easing US Treasury yields and a dip in crude, amid slowing business activity in the United States. The benchmark 10-year US bond yield slipped 3 basis points to 4.35 per cent, further weighing on the dollar.

At the interbank foreign exchange market, the rupee opened at 85.60 and traded in a narrow band, touching a high of 85.25 and a low of 85.67 during the session. It eventually ended the day at 85.29, marking a sharp turnaround from Wednesday’s close of 85.45, when it had weakened by 26 paise.

Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, noted, “Rupee traded positive at 85.25 with gains of 0.16rs, as the dollar index retreated from the key resistance near 100$, slipping back towards 99.30$. This pullback in the dollar helped ease pressure on the rupee, allowing it to regain strength after yesterday’s weakness.”

“The move also reflects some relief in global sentiment, with dollar buyers turning cautious ahead of key macroeconomic data from the US. The rupee found support from dollar weakness and improved sentiment in domestic equities, keeping its range-bound bias intact,” he added. Trivedi expects the rupee to hover between 84.90 and 85.60 in the near term, with direction dictated by US economic data and global market sentiment.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said, “We expect the rupee to trade with a positive bias as weakness in the US dollar is likely to remain intact amid trade tariff uncertainties. However, risk-on sentiments in the global markets and FII inflows may support the rupee at lower levels.”

“Traders may take cues from weekly unemployment claims, durable goods orders and existing home sales data from the US. USDINR spot price is expected to trade in a range of 85 to 85.70,”Choudhary added.

The dollar index, which tracks the greenback’s performance against six major currencies, was down 0.51 per cent at 99.33, while Brent crude rose 0.65 per cent to USD 66.55 per barrel in futures trade.

Dilip Parmar, Research Analyst at HDFC Securities, observed, “Near-term technicals for spot USDINR indicate support at 85.03 and resistance at 85.70. High-frequency data suggests a stronger rupee, though geopolitical factors may cap the gains.”

Traders also remained cautious in the wake of heightened geopolitical tensions following a deadly terror attack in Pahalgam, Jammu & Kashmir, that claimed 26 lives. Prime Minister Narendra Modi on Thursday vowed to hunt down the perpetrators, saying the killers would be pursued “to the ends of the earth.”

In response to the attack, India on Wednesday downgraded diplomatic ties with Pakistan and announced several countermeasures, including the expulsion of Pakistani military attaches, suspension of the Indus Water Treaty, and closure of the Attari land transit post.

Stock market summary

Meanwhile, Indian equities snapped a seven-session winning run on Wednesday, as profit booking emerged on the F&O expiry day. The S&P BSE Sensex dropped 315.06 points to end at 79,801.43, while the NSE Nifty50 shed 82.25 points to settle at 24,246.70. Broad-based selling was witnessed, with pressure mounting in the latter half of the session.

Foreign institutional investors, however, remained net buyers, pumping in Rs 3,332.93 crore worth of equities, according to exchange data.