By Christina Titus
The Indian rupee made some gains on Tuesday after being under pressure on looming India-US tariff concerns on the previous day. On Tuesday, rupee appreciated 16 paise to 85.70 on some positive signs of the trade deal.
“The high possibility that India might inch a mini trade deal with US has kept the rupee very range-bound and caused some marginal appreciation as compared to 86 levels yesterday,” said Ritesh Bhansali, director of Mecklai Financial Services. Though trade deal happens bring short-term positive movement in rupee, Bhansali believe that it will not last long.
Market participants expect the rupee to remain volatile as whole tariff talks weigh on the currency until the final announcement. RBI’s short forward book will likely prevent rupee from more appreciation compared to other Asian currencies, currency experts said. Currently, short forward book was $65.2 billion as of May, according to Bloomberg.
Domestic currency was the third best performed on Tuesday, after Philippine pesso gaining 0.60% and South Korean won at 0.41%.
“Among other Asian currencies, rupee tends to be a median performer due to the strong macro environment,” said Dilip Parmer, research analyst at HDFC Securities. “The RBI’s short dollar positions are manageable amid comfortable forex reserves. However, the global uncertainty is weighing on the rupee, in the near-term,” Parmer added.
Forex traders see the domestic currency to trade in the range of 85-86.50 against the dollar in the near-term. RBI will likely intervene on both the sides to curb excess volatility, they said.
