Mumbai, Jul 10 (PTI) The rupee pared initial gains and settled for the day higher by 3 paise at 85.70 against the US dollar on Thursday, supported by US-India trade deal optimism, even as domestic equity markets were closed in the negative territory.
Forex traders said the Indian rupee ended the day in green against the US dollar amid firm expectations that India and the US will reach a deal soon.
At the interbank foreign exchange, the rupee opened on a positive note at 85.62 against the US dollar, and traded in a range of 85.70 and 85.53 during the day. The local unit finally settled for the day at 85.70, up 3 paise from its previous close.
On Wednesday, the rupee closed flat at 85.73 against the US dollar on Wednesday.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee traded with minor gains on a weak US dollar and overnight decline in crude oil prices. However, weak domestic markets capped sharp gains.
“Global market sentiments are dented on uncertainty over trade tariffs. India and US are expected to finalise a mini trade deal which may support the domestic currency,” Choudhary said, adding, “traders may take cues from weekly unemployment claims data from the US. USD-INR spot price is expected to trade in a range of Rs 85.40 to Rs 85.95.” According to a government official, 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.
The dates for the US visit have not been finalised yet. However, the team is expected to visit Washington next week.
“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.
This visit is significant as the US has further extended the imposition of additional import duties (in the case of India, it is 26 per cent) till August 1. India is seeking the removal of this additional tariff.
India is also seeking the easing of tariffs on steel and aluminium (50 per cent) and the auto (25 per cent) sectors. Against these, India has reserved its right under the WTO (World Trade Organization) norms to impose retaliatory duties.
Meanwhile, Brent crude, the global oil benchmark, fell 0.34 per cent to USD 69.95 per barrel in futures trade.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.15 per cent to 97.41.
On the domestic equity market front, the Sensex dropped 345.80 points or 0.41 per cent to settle at 83,190.28, while the Nifty lost 120.85 points or 0.47 per cent to close at 25,355.25.
Foreign institutional investors (FIIs) purchased equities worth Rs 221.06 crore on a net basis on Thursday, according to exchange data. PTI DRR HVA
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