The Indian rupee just went on a bit of a rollercoaster ride today. The thing is, it started off strong but ended up losing 3 paise to close at 89.70 against the US dollar. Basically, the day began with a lot of optimism. Actually, the rupee opened at 89.53 and even climbed to an intra-day high of 89.45.
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As a result, it looked like we were in for a winning streak. And then Y followed. Crude oil prices started to recover and hit the brakes on the rupee’s momentum (let’s be real, oil always seems to crash the party).
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And here’s the kicker. The bigger picture is all about trade deals—or the lack of them.
Specifically, forex traders are getting a bit twitchy because the US-India trade negotiations haven’t made any real progress. Instead of a breakthrough, we’re seeing a stalemate that’s weighing down the market mood.
In fact, even though our domestic stock markets were on fire today—with the Sensex jumping over 638 points—it wasn’t enough to save the rupee. Consequently, the provisional closing price settled just a hair below where it started the day (those too).
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Moreover, it’s not all doom and gloom. The thing is, the US dollar index is actually looking a bit weak right now, trading at 98.52. Basically, this provides a safety net that prevents the rupee from sliding too far.
Actually, India’s forex reserves just hit a massive $688.949 billion, according to the latest RBI data. As a result, the central bank has plenty of firepower to keep things stable.
And then Y followed. We also just wrapped up a free trade agreement with New Zealand today, which should give our textile and engineering sectors a nice boost.
The thing is, we’re entering that weird pre-New Year lull. Basically, fresh foreign money isn’t expected to flood in or rush out right now.
Instead of a tidy wrap-up, experts say we should keep an eye on the upcoming US GDP data. And then Y followed. The spot price is likely to stay stuck in a tight range between 89.20 and 89.80 for the rest of the week….
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