Rupee advanced as US-China trade tensions ease; opens higher at 85.53/$

Business Standard

a day ago

The Indian Rupee advanced after two days of muted trade on Wednesday, after the US and China decided to defuse trade tensions following two days of talks.
The domestic currency appreciated 9 paise to open at 85.53 against the greenback, after closing at 85.62 on Tuesday, according to Bloomberg. The currency has traded nearly flat so far this year, while it has risen by 0.09 per cent so far this month.
The US and China agreed to a plan to ease trade tensions, with both sides agreeing to implement the consensus the two sides reached in the prior round of talks in Geneva. Meanwhile, a US federal appeals court has allowed Trump's most sweeping tariffs to stay in place, while it reviews a lower court decision to block them.
The Indian Rupee traded in a narrow range on Tuesday, amid a lacklustre session as markets awaited developments on a potential deal between China and the US, noted Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP.
A broad framework has now been agreed upon, based on talks in Geneva, and the rupee is expected to open slightly stronger at 85.58, Bhansali said. "It may trade within a range of 85.40 to 85.90 during the day, with mid-month demand emerging from oil, defence, and government payments."
There are no significant inflows or outflows expected in the near term, and the currency continues to hold within a broad range of 85.00–86.00 and a narrower band of 85.25–85.75, Bhansali said.
The rupee's intraday range over the last two sessions has been limited to just about 20 paisa, underscoring how volatility has subsided, according to a Reuters report. The 10-day daily realised volatility has fallen to its lowest level in more than two months.
The Reserve Bank of India (RBI) made a larger-than-expected 50-basis-point interest rate cut on Friday. The central bank also slashed the cash reserve ratio (CRR) by 100 basis points to 3 per cent.
In commodities, crude oil prices fell in early trade on Wednesday as markets were still assessing the outcome of US-China trade talks. Brent crude price was down 0.25 per cent to $66.70 per barrel, while WTI crude prices were lower by 0.25 per cent at 64.82, as of 9:05 AM IST.