Rupee Gains Against Dollar: Trade Deal Optimism

Mumbai, Nov 19 (PTI) The rupee closed 2 paise higher at 88.58 (provisional) against the US dollar on Wednesday, aided by buying momentum in domestic equity markets and lower crude oil prices overseas.

Forex traders said a strong American currency and outflow of foreign capital prevented a sharp gain in the rupee even as investors were concerned about the progress on the proposed India-US trade deal.

At the interbank foreign exchange market, the rupee opened at 88.57 and hit an intra-day high of 88.41 against the greenback. The domestic unit settled the day at 88.58 (provisional) against the dollar, logging a marginal gain of 2 paise from its previous closing level.

On Tuesday, the rupee settled 1 paisa lower at 88.60 against the US dollar.

"We expect the rupee to trade with a slight positive bias on rise in risk appetite in global markets and trade deal optimism. However, strong dollar and fading rate cut expectations may cap the upside. Dollar demand from importers and FII outflows may pressurise the rupee at higher levels. USD-INR spot price is expected to trade in a range of Rs 88.25 to Rs 88.70," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.18 per cent higher at 99.63.

Brent crude, the global oil benchmark, declined 0.46 per cent to USD 64.58 per barrel in futures trade.

On the domestic equity market front, Sensex soared 513.45 points or 0.61 per cent to settle at 85,186.47, while Nifty jumped 142.60 points or 0.55 per cent to 26,052.65.

Foreign institutional investors sold equities worth Rs 728.82 crore on Tuesday, according to exchange data.

Commerce and Industry Minister Piyush Goyal on Tuesday said "you will hear a good news" on the proposed trade pact between India and the US once the deal is fair, equitable and balanced.

The remarks came days after US President Donald Trump stated that the US is "pretty close" to reaching a "fair trade deal" with India, and added that he will lower tariffs imposed on Indian goods at "some point".