Rupee rises 5 paise to close at 88.67 against US dollar

Mumbai: The rupee appreciated five paise to close at 88.67 (provisional) against the US dollar on Monday, supported by suspected RBI intervention and fresh foreign fund inflows.

Forex traders said the domestic unit faced some resistance as renewed trade war tensions between the US and China led to risk aversion in global markets.

At the interbank foreign exchange, the rupee opened at 88.75 and traded in the range of 88.57-88.79 before settling at 88.67 (provisional), registering a rise of 5 paise than its previous close.

On Friday, the rupee appreciated seven paise to close at 88.72 against the US dollar.

The US threatened an additional 100 per cent tariffs on China after Beijing announced controls over exports of rare earth last week.

The USD/INR pair got support from optimism surrounding the India-US trade talks and potential RBI intervention, traders said.

"The US government shutdown and rising odds of a rate cut by the US Federal Reserve may further strengthen the domestic currency. However, risk aversion in global markets amid renewed US-Sino tariff war may cap sharp upside. Traders may take cues from India’s CPI data," Anuj Choudhary, Research Analyst, Currency and commodities, Mirae Asset ShareKhan, said.

Forex traders said positive sentiments stemmed from expectations after reports surfaced that a team of senior officials from India would visit the US this week for trade talks, and that negotiations on the proposed bilateral trade agreement are progressing well.

Last month, Commerce and Industry Minister Piyush Goyal led an official delegation to New York for trade talks.

After that meeting, India and the US decided to continue negotiations for an early conclusion of a mutually beneficial bilateral trade agreement.

Both sides held constructive meetings on various aspects of the trade deal.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.13 per cent higher at 99.10, as safe-haven demand for dollars continues keeping the dollar well bid.

Brent crude, the global oil benchmark, was trading higher by 1.90 per cent at USD 63.91 per barrel in futures trading.

On the domestic equity market front, the Sensex declined 173.77 points to settle at 82,327.05, while the Nifty dropped 58 points to close at 25,227.35.

Meanwhile, Foreign Institutional Investors bought equities worth Rs 459.20 crore on Friday, according to exchange data.

India's forex reserves fell by USD 276 million to USD 699.96 billion during the week ended October 3, according to RBI data.

In the previous reporting week, India's forex reserves had dropped by USD 2.334 billion to USD 700.236 billion.