On Monday, the rupee stopped falling against the dollar after four straight days as investors turned more careful following new turmoil in trade talks between the US and China. Rupee strengthened by 19 paise and moved up to 85.39 against one US dollar on Monday, compared to its previous Friday closing at 85.58, as shown by the data.
A fall in the value of the dollar as a result of Trump’s decision to increase tariffs for steel and aluminium (to 50%) boosted the rupee. Concerns arose that the action could make trade tensions worse around the world, so investors turned cautious. Therefore, the US Dollar Index, which compares the US dollar to six main global currencies, fell 0.56% and settled at 98.76.
Because the dollar was weak, the rupee found some support, but its rise was held back by higher oil prices. By 3:30 PM IST, Brent crude futures climbed 3.38% to $64.90 per barrel, and West Texas Intermediate (WTI) crude saw a rise of 3.68% to $63.03 per barrel. Oil rallied because traders were let down by the OPEC+ agreement and were still concerned about tariffs.
Much better macroeconomic figures in India helped the rupee gain strength. The fourth quarter (Q4) Gross Domestic Product (GDP) growth in India registered at 7.4%, the best in a year. During the full 2022-23 fiscal year, GDP increased by 6.5%, a bit below the Reserve Bank of India’s (RBI) annual forecast of 6.6%.
Though several challenges affected the world economy, the rupee proved it can withstand pressures, and analysts believe future sessions will be crucial to consider oil and political changes.
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