Rupee jumps 24 paise to close at 87.85 against US dollar

Mumbai, Sep 17 (PTI) The rupee appreciated 24 paise to close at 87.85 against US dollar on Wednesday, tracking a positive trend in domestic equities and supported by optimism over US–India trade negotiations.

Forex traders said the Indian rupee strengthened for the fourth consecutive session on Wednesday and rose to the highest level in two and a half weeks on broad weakness of the American currency amid hopes of a rate cut by US Federal Reserve.

They said investors are closely following the Fed's policy decision as dollar softness globally is triggering rupee's strength.

The market is expecting a 25-basis point rate cut, and investors will watch out for the Fed chair's speech for further guidance.

At the interbank foreign exchange market, the rupee opened at 87.84, then touched an intraday low of 87.86 and a high of 87.71 against the greenback. The domestic unit closed at 87.85, registering a gain of 24 paise over its previous close.

On Tuesday, the rupee appreciated 7 paise to close at 88.09 against the US dollar.

"We expect the rupee to strengthen further amid sustained weakness in the US dollar ahead of the FOMC meeting decision. Markets expect a 25-bps rate cut," said Anuj Choudhary, Research Analyst, currency and commodities, Mirae Asset ShareKhan.

"Any front loading of dovish commentary may lead to fresh decline in the US dollar and may lead to further improvement in the global risk sentiments," Choudhary added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.16 per cent to 96.78.

Dilip Parmar - Senior Research Analyst, HDFC Securities, said the rupee's strength is "largely a reflection of a more positive outlook on US-India trade relations and the ongoing 'long unwinding' in the USD-INR.

"We see a key support level at 87.65, a decisive break of this upward-sloping trendline would signal a further strengthening of the rupee versus dollar, with the strong resistance level at 88.40," he added.

Brent crude, the global oil benchmark, was trading 0.66 per cent lower at USD 68.02 per barrel in futures trade.

On the domestic equity market front, the Sensex climbed 313.02 points to settle at 82,693.71, while the Nifty was up 91.15 points to 25,330.25.

Foreign Institutional Investors sold equities worth Rs 1,124.54 crore on a net basis on Wednesday, according to exchange data.

Meanwhile, the US on Tuesday described as "positive" the talks between its chief trade negotiator, Brendan Lynch, and his Indian counterpart Rajesh Agrawal for a proposed bilateral trade deal.

The relations between New Delhi and Washington were reeling under severe stress after US President Donald Trump doubled tariffs on Indian goods to a whopping 50 per cent, including 25 per cent additional duties, for India's purchase of Russian crude oil. PTI DRR HVA