Rupee today: Indian currency strengthens against dollar, oil prices on the decline
The rupee strengthened against the dollar as oil prices fell to their lowest level since Russia’s invasion of Ukraine and eased concerns about India’s trade deficit and inflation outlook.
After an extended weekend break, the partially convertible rupee strengthened at 79.2800, as against Friday’s close of 79.6550, Reuters reported.
Bloomberg on Friday put the rupee at 79.3925 per dollar, as against 79.5363 on Friday. According to the news agency, the currency, after opening at 79.5912, was trading in the 79.2775-79.5938 range against the greenback.
PTI reported that the Indian currency rose 44 paise to 79.30 against the US dollar in early trade.
The international benchmark, Brent crude, recovered somewhat from a six-month low early Wednesday, when data showed US stockpiles fell.
But on Tuesday, Brent crude prices fell nearly 3 per cent to near $92 a barrel amid concerns of a possible global economic slowdown.
Oil prices have fallen to levels previously seen before Russia’s invasion of Ukraine is expected to ease concerns about India’s huge trade deficit and inflation prospects.
India’s trade imbalance for July stood at $30 billion, and for seven consecutive months, consumer inflation has exceeded the Reserve Bank of India’s upper tolerance limit.
A trader at a foreign bank said that “the more oil falls, the lesser will be the need to hedge against an excessive depreciation in the rupee”.
He said a combination of soft oil prices, higher US Treasury yields and healthy risk appetite suggests that the rupee will remain in the trading band of 78.50-80 per dollar.
US Treasury yields rose on Tuesday as speculation grew that the Federal Reserve would likely maintain its position despite July inflation data.
Policy makers there have said that they will continue to raise interest rates to deal with the threat of inflation.
Minutes of the July Fed meeting will be released later on Wednesday. The 2-year yield is practically at the same level as the 10-year yield, which is higher than expected before the softer US inflation report.
Before Fed minutes, the dollar index was unchanged.