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Rupee extends gains on weak Dollar; opens 17 paise higher at 85.05/$
Indian Rupee opened with gains on Monday, in line with other Asian currencies, amid a weaker US dollar. This followed its sharpest single-day gain since November 2022 in the previous session.
The domestic currency began trading 17 paise stronger at 85.05 against the US dollar, after ending at 85.22 on Friday, according to Bloomberg. The domestic unit has weakened 0.66 per cent so far this month. Meanwhile, the Korean won, Thai baht, and Indonesian rupiah have gained between 2.5 per cent and 5.5 per cent.
The gain in current follows Reserve Bank of India's recent surplus transfer of ₹2.69 trillion to the government, which fell short of some market projections ranging up to ₹3 trillion. The RBI dividend represents a substantial and durable infusion of liquidity into the system. However, its impact on system liquidity will become evident only when government expenditure begins to accelerate.
After reversing course on Friday from a low of 86.06 to 85.10, the Indian Rupee is expected to open slightly stronger at 85.03 on Monday morning, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "The session coincides with a US holiday, leading to subdued market flows, while five mainboard IPOs are set to launch this week."
The outflows of MSCI tomorrow could be a trigger for the rupee to weaken a bit from tomorrow, Bhansali added.
The dollar index continued to face pressure after US President Donald Trump extended the deadline for 50 per cent European Union tariffs until July 9. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.3 per cent at 98.81.
Foreign Institutional Investors (FIIs) could potentially continue selling due to a narrowing bond yield differential between Indian and US 10-year bonds. Global funds have already pulled out ₹4,000 crore from the Indian bond market last week (excluding Friday), the highest in over a month, compounding rupee pressure.
Crude oil prices edged higher on easing trade tensions after Trump's deadline extensions for the EU. Brent crude price was up 0.31 per cent to $64.98 per barrel, while WTI crude prices were 0.31 per cent higher at 61.72, as of 9:22 AM IST.
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