Rupee Jumps Before RBI's Repo Rate Announcement, Trump's Dollar Watches On, Currency Market Sees 'Action'

Indian Currency: According to foreign exchange traders, the rupee's gains were limited due to continuous outflows by foreign investors, rising crude oil prices, and a slight strengthening of the US dollar.

Rupee vs Dollar: The Reserve Bank of India's Monetary Policy Committee's decision to keep the repo rate unchanged and maintain a positive growth outlook also impacted the rupee on Friday. ​​At the start of the last trading day of the week, the Indian rupee strengthened by 11 paise against the dollar, reaching 90.23. Investor confidence in the policy remained strong, providing support to the rupee in early trading.

Why the Rupee's Rise?

However, according to foreign exchange traders, the rupee's gains were limited due to continuous outflows by foreign investors, rising crude oil prices, and a slight strengthening of the US dollar. In the interbank foreign exchange market, the rupee opened at 90.28 and strengthened to 90.23 per dollar during trading, representing an increase of 11 paise from the previous close. The rupee had also risen by 13 paise the previous day, closing at 90.34 on Thursday.

Meanwhile, the dollar index, which reflects the dollar's position against six major currencies, rose by 0.04 percent to 97.85. Domestic stock markets witnessed pressure in early trading, with the Sensex falling 225.15 points to 83,088.78 and the Nifty slipping 89.25 points to 25,553.55. In the international market, Brent crude rose 0.33 percent to $67.77 per barrel. According to stock market data, foreign institutional investors (FIIs) were net sellers on Thursday, offloading shares worth Rs 2,150.51 crore.

What are the Experts Saying?

Despite the hopes surrounding the trade agreement, the foreign exchange market is now showing more caution than enthusiasm. Foreign exchange traders say investors are currently focusing on facts and confirmation rather than celebrating, as no official document has been released yet, nor have the final terms been formally made public by either country.

Furthermore, the market is also keeping a close eye on the Reserve Bank of India's (RBI) interest rate announcement on Friday, which could provide clues about the future direction.

According to Anuj Choudhary, research analyst at Mirae Asset Sharekhan, the rupee could trade with a positive bias amid expectations of a US-India trade deal. However, he cautioned that weakness in the domestic stock market and a stronger US dollar could limit the rupee's gains.

Choudhary also added that high crude oil prices and escalating tensions between the US and Iran could keep the rupee under pressure at higher levels. Therefore, investors are closely watching for signals from the RBI's monetary policy.