New Delhi (TIP): The rupee strengthened against the US dollar in early trading on Friday, June 19, buoyed by growing optimism over progress in trade negotiations between India and the United States, supportive crude oil prices and improving capital flows into the country.
The Indian currency appreciated by 20 paise to 94.20 against the dollar in the interbank foreign exchange market after opening at 94.30. The gain marked a recovery from its previous record-low closing level and reflected improving sentiment among currency traders.
Market participants said expectations of a breakthrough in trade discussions between New Delhi and Washington have provided fresh support to the rupee. The positive mood follows high-level talks between Prime Minister Narendra Modi and US President Donald Trump on the sidelines of the G7 Summit, where both leaders reportedly instructed negotiators to expedite efforts towards finalising a proposed trade agreement.
Indian foreign secretary Vikram Misri said trade featured prominently in the discussions between the two leaders and confirmed that significant progress had already been made on an interim trade arrangement. He also announced that US Trade Representative Jamieson Greer is scheduled to visit India next week to advance the negotiations.
Currency analysts said the rupee was also benefiting from easing crude oil prices, which help reduce India’s import bill and support the country’s external balance. Brent crude futures were trading below recent highs, providing additional relief to the domestic currency.
According to Amit Pabari, managing director of CR Forex Advisors, the Reserve Bank of India is likely to utilise incoming dollar inflows to strengthen the country’s foreign exchange reserves while gradually reducing its sizeable forward dollar commitments, estimated at around USD 110 billion.
He noted that market participants believe the central bank may already have purchased between USD 3 billion and USD 5 billion over the past two trading sessions. Such interventions, he said, should not be viewed as a sign of concern but rather as an effort to capitalise on favourable market conditions. However, they could moderate the pace of the rupee’s appreciation by ensuring gains remain gradual. Globally, the US dollar remained firm, with the dollar index, which measures the greenback against a basket of major currencies, edging higher in early trade.
Despite the rupee’s gains, domestic equity markets came under pressure. The BSE Sensex fell sharply in morning trade, while the NSE Nifty also declined, reflecting cautious investor sentiment. Data from the exchanges showed that foreign institutional investors were net sellers of Indian equities on Thursday.
