The rupee surrendered most of its early gains but managed to close 6 paise higher at 94.34 (provisional) against the US dollar on Friday, as a strengthening dollar index and elevated crude oil prices tempered investor optimism.
According to forex market participants, the domestic currency began the session on a positive note amid expectations that trade discussions between India and the United States would gather pace in the coming weeks.
The optimism followed comments by Indian Foreign Secretary Vikram Misri, who said on Thursday that trade featured prominently in discussions between Prime Minister Narendra Modi and US President Donald Trump. Both leaders, he noted, had instructed their negotiating teams to expedite efforts towards finalising the proposed bilateral trade agreement. However, the positive momentum was partially offset by growing uncertainty surrounding the proposed US-Iran peace process, which weighed on overall market sentiment.
Adding to the uncertainty, US Vice President JD Vance postponed his planned visit to Switzerland, where talks with Iranian negotiators were scheduled to take place. The White House attributed the decision to logistical constraints.
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In the interbank foreign exchange market, the rupee opened at 94.30 against the greenback and moved within a range of 94.20 to 94.52 during the trading session. It eventually settled at 94.34 (provisional), registering a gain of 6 paise over its previous closing level.
On Thursday, the local currency had appreciated by 10 paise to end at 94.40 against the US dollar. "The rupee remains the lead performer among Asian peers, energised by a resurgence of capital inflows and cooling oil prices. With risk-on sentiment back in the driver's seat, we expect the local rupee to march towards 94 on the back of dollar inflows. Technically, USDINR spot is boxed between a crucial resistance at 94.90 and firm support at 94.10," said Dilip Parmar, Research Analyst at HDFC Securities.
Meanwhile, the dollar index, which measures the performance of the US currency against a basket of six major global currencies, was trading 0.08 per cent lower at 100.76. In the commodities market, Brent crude, the international benchmark for oil prices, was quoted 0.65 per cent lower at USD 79.33 per barrel in futures trading.
Domestic equity markets, however, witnessed sharp selling pressure. The BSE Sensex plunged 607.08 points to close at 76,802.90, while the NSE Nifty declined 154.90 points to settle at 24,013.10. Foreign Institutional Investors (FIIs) remained net sellers in the equity market, offloading shares worth Rs 1,025.20 crore on Thursday, according to exchange data.
Misri's remarks came a day after Prime Minister Modi and President Trump held their first extensive bilateral discussions in 16 months on the sidelines of the G7 Summit, in an effort to strengthen and revive momentum in India-US relations.
The Foreign Secretary also stated that considerable progress had been achieved towards concluding an interim trade agreement. He added that US Trade Representative Jamieson Greer is expected to visit India next week to carry forward negotiations and accelerate discussions on the proposed pact.
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