Indian rupee dips but firmer yuan, exporter dollar sales cushion losses
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The Indian rupee ended marginally weaker on Wednesday with the strength in the Chinese yuan and exporter activity helping the currency hold above a psychologically important support level.The rupee closed at 86.4075 per U.S. dollar, down slightly from its close at 86.3675 in the previous session but managing to hold above the 86.50 support level.The offshore Chinese yuan rose to a near three-week high while the dollar index was a tad lower at 97.4.Dollar sales from a large private bank and exporter activity also helped the rupee contain its losses on the day, alongside positive regional cues, a trader at a state-run bank said.India's benchmark equity indexes, the BSE Sensex and Nifty 50 closed higher by about 0.6% each, tracking gains in global equities that were buoyed by hopes of easing trade tensions after a deal between the U.S. and Japan. Equity markets globally are rallying on the view that deals reduce uncertainty," ING said in a note.U.S. President Donald Trump also announced a trade agreement with the Philippines, released terms of a previous deal with Indonesia on Tuesday and said that EU representatives were coming for trade negotiations on Wednesday.Officials from China and the U.S. are also expected to meet next week to discuss an extension to the deadline for negotiating a trade deal For India, though, the prospects of a trade deal before the August 1 deadline have dimmed, with talks deadlocked over tariff cuts on key agricultural and dairy products. Foreign portfolio outflows and the lack of an outcome on trade negotiations have maintained pressure on the rupee, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.Parmar expects the rupee to decline towards 86.70 in the near-term.
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