Rupee jumps 23 paise to close at 88.50 against US dollar

Mumbai, Nov 11 (PTI) The rupee appreciated 23 paise to settle at 88.50 against the US dollar on Tuesday, amid progress on the US shutdown bill and optimism over the US-India trade deal.

Forex traders said a rebound in domestic equities and optimism over a nearing US trade deal supported the local unit.

However, elevated crude oil prices and foreign fund outflows weighed on investor sentiment.

At the interbank foreign exchange market, the rupee opened at 88.69 against the American currency, touched an intraday high of 88.50 and a low of 88.72 during the session.

The domestic unit finally settled for the day at 88.50, higher by 23 paise from its previous close.

On Monday, the rupee had settled at 88.73 against the greenback.

"The rupee gained on Tuesday, on a rise in risk appetite in global markets and a weak dollar," Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said, adding that expectations of the end of the US government shutdown boosted global market sentiments.

Choudhary further noted that the rupee is expected to trade with a slight positive bias on rising global markets and weakness in the US dollar.

"However, elevated crude oil prices and importer demand for dollars may cap the upside. Markets may remain volatile as the US government shutdown nears an end. USD-INR spot price is expected to trade in a range of 88.30 to 88.80," he said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.03 per cent to 99.61.

Brent crude, the global oil benchmark, rose 0.34 per cent to USD 64.28 per barrel in futures trading.

Dilip Parmar, Research Analyst, HDFC Securities, said the rupee exhibited a notable uptick "primarily catalysed by comments from US President Donald Trump, who said the US and India were moving 'pretty close' to finalising a trade accord.

"We expect that the successful culmination of the trade deal with the US will serve as a powerful catalyst for the Indian rupee, potentially triggering a swift and substantial appreciation. In the near term, the spot USD-INR pair faces critical support at the 88.40 level, while encountering resistance at 88.75," Parmar said.

US President Donald Trump has said that the US is "pretty close" to reaching a "fair trade deal" with India, adding that he will lower the tariffs imposed on New Delhi "at some point".

"We're making a deal with India, a much different deal than we had in the past. So right now, they don't love me, but they'll love us again," Trump said on Monday.

Moreover, top Trump aide Sergio Gor was sworn in as the US Ambassador to India, with President Donald Trump calling the post a "big deal" and underscoring that he is entrusting the new envoy to help strengthen one of Washington's "most important international relationships".

On the domestic equity markets front, Sensex jumped 335.97 points to settle at 83,871.32, while the Nifty climbed 120.60 points to 25,694.95.

Foreign Institutional Investors offloaded equities worth Rs 803.22 crore on Tuesday, according to exchange data. PTI DRR HVA