The Indian Rupee opened stronger against the US Dollar on Monday as global markets await president-elect Donald Trump’s inauguration Day speech tonight.
The domestic currency strengthened by 14 paise to open at 86.47 against the dollar, according to Bloomberg data. It had settled at Rs 86.61 a dollar on Friday.
Dollar index, which measures the strength of the greenback against the six major currencies, declined after a one-day rise on Friday. Before that, it had fallen for four consecutive sessions.
Trump’s policies are likely to inject fresh volatility into the DXY, according to Amit Pabari, MD of CR Forex. His “America First” trade agenda and potential geopolitical tensions could drive risk aversion, pushing the dollar higher in the short term, he noted. On the other hand, market concerns about isolationist policies and their global economic implications may temper gains.
He also noted that on the domestic front, India’s forex reserves dropped by $8.714 billion to $625.871 billion in the week ended January 10, reflecting the RBI’s efforts to protect the rupee from excessive depreciation.
However, the RBI has committed to daily Variable Rate Repo auctions to ease liquidity pressures amid a Rs 2.22 trillion banking system deficit, which has created additional strain on the rupee, he said. “Given these contrasting pressures, short-term volatility is inevitable as markets adjust,” he added. “The rupee is expected to trade within a volatile range of 86.20 to 86.80 ahead of key events in the global and domestic economic landscape.”
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, expects rupee to move in a range of 86.40/70 for the day which could become volatile as it progresses. “Dips are still busy for importers as we expect rupee to depreciate by Rs. 1.50 to 88 by March to bring REER towards 105 levels,” he said.
. Read more on Markets by NDTV Profit.The domestic currency strengthened by 14 paise to open at 86.47 against the dollar, according to Bloomberg data. It had settled at Rs 86.61 a dollar on Friday. Read MoreMarkets, Economy & Finance
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