Rupee Opens Stronger Against US Dollar, Gains 7 Paise to 90.40
The Indian rupee opened in positive territory on Thursday, registering a gain of 7 paise against the US dollar to reach 90.40 in early trading sessions. This upward movement was primarily supported by corporate dollar demand, though market participants maintained a cautious stance as they awaited detailed confirmation of the India-US trade agreement.
Market Sentiment Shifts from Optimism to Caution
Market mood has transitioned from earlier optimism to a more guarded approach, with investors seeking official documentation and final terms of the trade pact. Neither the Indian nor US government has released formal documentation or published the conclusive agreement details so far, creating an atmosphere of uncertainty in trading circles.
Sentiment remained particularly restrained ahead of the Reserve Bank of India's interest rate decision scheduled for Friday. Market experts widely anticipate the central bank to maintain current interest rates, with growing consensus suggesting that rate cuts are improbable at least until the end of 2026.
Trading Patterns and Technical Analysis
At the interbank foreign exchange market, the domestic currency commenced trading at 90.52 against the US dollar before firming up to 90.40, marking a 7-paise appreciation compared to Wednesday's closing figure. The previous trading session had witnessed the rupee weakening by 15 paise to conclude at 90.47 against the greenback.
During early Thursday trading, the currency also touched a low of 90.53 before recovering ground. According to CR Forex Advisors managing director Amit Pabari, "The market is now waiting for confirmation and finer details before extending the rupee's rally further."
From a technical perspective, Pabari identified strong support levels for the rupee, noting that "the 89.80–90.00 zone has emerged as a strong support base. With this area holding firmly, the pair now appears poised to move back toward the 90.80–91.20 range with greater conviction."
Global Market Context and Domestic Indicators
In international markets, the dollar index, which measures the greenback against a basket of six major currencies, was trading 0.18% higher at 97.79. Meanwhile, Brent crude futures, the international oil benchmark, declined by 2% to $68.07 per barrel.
Domestic equity benchmarks opened lower in early trade, reflecting the cautious sentiment prevailing across financial markets. However, foreign institutional investors demonstrated confidence by being net buyers in the equity market on Wednesday, purchasing shares worth Rs 29.79 crore according to exchange data.
Future Outlook and Key Factors
Looking ahead, market analysts emphasize that RBI actions will remain a crucial factor to monitor alongside confirmation of the final trade agreement and its exact terms. Pabari highlighted that "attention has now shifted to the RBI's Monetary Policy Committee meeting" as a significant determinant of future currency movements.
The combination of corporate dollar demand, anticipation surrounding the trade deal specifics, and monetary policy expectations creates a complex landscape for the rupee in coming sessions. Market participants will closely watch for official announcements from both governments regarding the trade agreement while simultaneously monitoring the RBI's policy stance for directional cues.
