Indian Rupee: Recovers On Fresh Dollar Sales; Weaker Greenback

The Indian rupee recovered against the dollar in early trades on Tuesday, 22 May 2018 on fresh selling of the dollar by exporters and banks. Besides, weakness in the dollar against other currencies overseas also supported the rupee. Further, investor sentiment turned positive on easing trade woes between the US and China leading to a higher opening of the domestic equity market, boosting the domestic unit.

The domestic currency recouped from its 16-month low to trade higher at 68.02 against the US dollar in opening trades today. The local unit climbed to a high of 67.93 so far during the day and was last seen trading at 68.00 in the spot currency market. Yesterday, the rupee had lost 12 paise to close at a fresh 16-month low of 68.12 against the US currency on sustained dollar demand from importers and corporates amid weak global cues.

Domestic benchmark indices bounced back and hit fresh intraday high in morning trade led by strength in index pivotals ICICI Bank, HDFC Bank and Larsen & Toubro. At 10:20 IST, the barometer index, the S&P BSE Sensex, was up 60.57 points or 0.17% at 34,676.70. The Nifty 50 index was up 24.45 points or 0.23% at 10,541.15.

Overseas, Asian shares were mixed. The US market jumped overnight as investors applauded easing trade animosities between the US and China. US Treasury Secretary Steven Mnuchin reportedly said that bilateral trade talks with China had made very meaningful progress and that it was now up to both parties to implement what had been discussed. Mnuchin said over the weekend that the Trump administration would delay implementation of tariffs on Chinese goods and put the trade war on hold while working out details of a deal between the countries.

Meanwhile, the dollar eased from fresh five month highs as gains on the back of abating trade war fears were offset by a recovery in the euro from multi-month lows. The U.S. dollar index, which measures the greenbacks strength against a trade-weighted basket of six major currencies, rose by 0.01% to 93.59, easing from a five-month high of 93.97.