Rupee rises 8 paise to close at 88.08 against US dollar

Mumbai: The rupee appreciated 8 paise to close at 88.08 (provisional) against the US dollar on Tuesday, tracking US-India talks on the proposed trade agreement to iron out issues in the wake of steep Trump Tariffs.

Forex traders said the rupee strengthened on positive domestic markets and a weak greenback, which is trading at a two-month low ahead of the two-day FOMC meeting commencing Tuesday and disappointing US economic data.

At the interbank foreign exchange, the rupee opened at 88.05, then touched an intraday low of 88.16 and a high of 88.01 against the greenback. The domestic unit closed at 88.08 (provisional), a gain of 8 paise over its previous close.

On Monday, the rupee settled 10 paise higher at 88.16 against the US dollar.

"We expect the rupee to remain strong on broad weakness in the US Dollar amid disappointing economic data coming from the US and weak labour market, which has raised expectations of a rate cut by the Fed," said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan.

Choudhary further added that markets expect a 25-bps rate cut and investors will watch out for the Fed Chair's speech for further guidance.

"A dovish commentary may lead to further decline in the greenback while a hawkish tone may lead to a pullback," he said.

"Traders may take cues from retail sales and industrial production data from the US. Investors may remain cautious ahead of the FOMC meeting decision this week. USD/INR spot price is expected to trade in a range of 87.75 to 88.30," Choudhary said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.26 per cent to 97.04.

Brent crude, the global oil benchmark, was trading 0.28 per cent lower at USD 67.25 per barrel in futures trade.

On the domestic equity market front, the Sensex jumped 594.95 points to settle at 82,380.69, while the Nifty surged 169.90 points to 25,239.10.

Foreign Institutional Investors offloaded equities worth Rs 1,268.59 crore on a net basis on Monday, according to exchange data.

Meanwhile, the Chief negotiators of India and the US have commenced talks on the proposed trade agreement to iron out issues in the wake of steep tariffs that have created uncertainties for exporters.

Brendan Lynch, the Assistant US Trade Representative for South and Central Asia, is leading the American team, while Rajesh Agrawal, Special Secretary in the Department of Commerce, is India's chief negotiator.