The Indian rupee appreciated against the dollar on Tuesday as the greenback dropped to a multi-year low on worries over the US fiscal deficit and uncertainty surrounding trade deals ahead of the July 9 deadline.
The rupee ended 21 paise higher at 85.54 against the dollar. Intraday, the local currency gained as much as 27 paise.
July’s positive start comes after the domestic unit shed 0.2% in June, compared to 1.3% in May. On Monday, the rupee depreciated by 26 paise amid foreign portfolio outflows.
Data released after market-hours a day ago showed that the size of Reserve Bank of India’s FX forward book shrank to $65.2 billion at the end of May, down from $72.6 billion in the previous month, as per Reuters. The data is released with a one-month lag.
Weak Dollar
The dollar index slid 0.5% to 96.4, the lowest since February 2022. Safe haven demand drove the Japanese Yen higher by 0.8% to 142.85, while both the euro and British Pound gained 0.3%.
The euro is on the verge of posting its longest winning streak against the dollar in over two decades.
Emerging market currencies also gained over the dollar.
Meanwhile, oil prices that widely influence the rupee steadied around the lowest level since early June. Brent crude traded below $67 a barrel, while West Texas Intermediate was near $65.
As per reports, the Organization of the Petroleum Exporting Countries and its allies are expected to agree to a fourth monthly major supply increase at a meeting later this week.
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