Rupee began Thursday on a weak note, falling over 20 paise against the US dollar in early trade. The fall came as the American currency strengthened globally after the US Federal Reserve’s hawkish policy stance. Rupee opened at 94.66 against the dollar in the interbank foreign exchange market and later slipped to 94.71, down 21 paise from its previous close of 94.50. Earlier on Wednesday, the currency had gained 10 paise to settle at 94.50 against the greenback. According to forex traders, the US dollar gained momentum after the Federal Reserve kept interest rates unchanged, as expected, but signalled that at least one quarter-point rate increase could take place later this year. The dollar index climbed to 100.23, its highest level in four months. “Asian currencies had also weakened considerably, taking the rupee lower this morning. Most asset classes had fallen against the dollar keeping it well bid while the asset class was well offered,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP. The dollar index, which measures the US currency against a basket of six major currencies, was trading 0.14% higher at 100.23. Meanwhile, Brent crude futures declined 1.68% to $78.21 per barrel. Domestic equity markets also opened lower, with the Sensex falling 111.23 points to 77,044.39 and the Nifty slipping 26.85 points to 24,058.85 in early trade. Foreign institutional investors, however, remained net buyers, purchasing equities worth Rs 101.59 crore on Wednesday, according to exchange data. Traders said sentiment was supported by reports that the United States and Iran had electronically signed a memorandum of understanding aimed at ending hostilities and establishing a framework for negotiations on Iran’s nuclear programme. Negotiators are expected to meet in Geneva on Friday. “The agreement has improved market sentiment considerably, although President Trump simultaneously warned that military action could resume if Iran fails to comply with the framework,” CR Forex Advisors MD Amit Pabari said. Separately, PM Narendra Modi and US President Donald Trump directed officials from both countries to work towards concluding a balanced, mutually beneficial and commercially meaningful trade agreement at the earliest. US trade representative Jamieson Greer is scheduled to visit India next week to advance discussions on the proposed trade agreement.
