Rupee falls 7 paise to close at 85.77 against US dollar

Mumbai: The rupee depreciated 7 paise to close at 85.77 (provisional) against US dollar on Friday, on weak domestic markets and risk-off sentiments amid trade tariff uncertainty.

Forex traders said global market sentiments were dented as US President Donald Trump imposed 35 per cent tariffs on Canadian goods.

At the interbank foreign exchange, the rupee opened at 85.76 against the US dollar, and touched an intra-day low of 85.91 during the day. The local unit finally settled for the day at 85.77 (provisional), down 7 paise from its previous close.

On Thursday, the rupee pared initial gains and settled for the day higher by 3 paise at 85.70 against the US dollar.

"We expect the rupee to weaken as the trade war continues to dent global risk sentiments. Uncertainty over trade tariffs and higher US dollar index may also pressurise the rupee. However, a weak tone in crude oil prices may support the rupee at lower levels," Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan, said.

Choudhary further added that USD-INR spot price is expected to trade in a range of 85.55 to 86.25.

Forex traders said rupee traded in a volatile but narrow range as market participants stayed on the sidelines, waiting for clarity on the US-India interim trade deal.

Meanwhile, Brent crude, the global oil benchmark, rose 0.34 per cent to USD 68.87 per barrel in futures trade.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.13 per cent to 97.77.

On the domestic equity market front, the Sensex dropped 689.81 points or 0.83 per cent to settle at 82,500.47, while the Nifty lost 205.40 points or 0.81 per cent to close at 25,149.85.

Foreign institutional investors (FIIs) purchased equities worth Rs 221.06 crore on a net basis on Thursday, according to exchange data.

Meanwhile, India is trying to negotiate and finalise a trade agreement with the US, Special Secretary in the Department of Commerce Rajesh Agrawal said on Thursday.

Agrawal is also the chief negotiator of the proposed India-US bilateral trade agreement.

The aim is to conclude the first phase of this pact by fall (September-October) of this year. Before that, the two countries are looking to finalise an interim trade agreement.

An Indian commerce ministry team will soon visit Washington for another round of talks on the proposed trade agreement with the US to iron out differences in sectors, like agriculture and automobiles, a government official said on Thursday.

"We are not differentiating between an interim or the first phase of the bilateral trade agreement. We are negotiating a complete deal. Whatever will be finished, we can package it as an interim deal and for the rest, talks will continue," the official said.