Inflows boost rupee to one-month high; trade deal optimism aids sentiment

Reuters

8 hours ago

MUMBAI, July 3 (Reuters) - The Indian rupee touched its strongest level in a month on Thursday, lifted by dollar sales from foreign banks and cutting of bearish bets on the local currency, while optimism surrounding a U.S.-India trade deal also aided sentiment.
The rupee rose to a peak of 85.20, its best level since late May, before ending the session at 85.31, up 0.4% on the day.
Dollar sales from foreign banks in the latter half of Thursday's session boosted the rupee, with the rise above 85.40 also triggering stop-losses on some wagers against the currency, traders said.
Asian currencies mostly rose, while the dollar index remained steady ahead of a key U.S. labour market report.
Most stock indices in Asia also gained on Thursday, after U.S.-Vietnam trade discussions raised the possibility of breakthroughs for other countries in the region ahead of the July 9 tariff deadline.
India's benchmark equity indexes though closed marginally lower.
U.S. and India trade negotiators were pushing on Wednesday to try to land a tariff-reducing deal ahead of President Donald Trump's July 9 negotiating deadline, per sources familiar with the talks.
"Given the U.S.-Vietnam trade deal and the looming July 9 deadline for the reciprocal tariff pause, markets are also alert to similar trade announcements with India and the European Union," DBS said in a Thursday note.
Traders reckon a trade deal with India could push the rupee above 85, but further gains would depend on foreign inflows and if the central bank steps in shore up its FX reserves via dollar purchases.
On the day, investors will also keep an eye on the U.S. non-farm payrolls report for cues on the future path of the Federal Reserve policy rates.
Economists polled by Reuters expect that the U.S. economy added 110,000 jobs in June, while the unemployment rate ticked up to 4.3%.