RBI intervention, a breather in dollar rally help rupee to recover in early trade

Rupee

Intervention by the Reserve Bank of India (RBI) in the early trade and conflicting reports on Trump tariffs helped the Indian rupee recover against the US dollar on January 7 morning.

At 10.20 am, the local currency was trading at 85.70 against the US dollar after opening at 85.78. The rupee ended the previous day at a record low of 85.83.

The American currency on January 6 dropped against a basket of major currencies after the Washington Post reported that president-elect Donald Trump's aides were exploring plans that would apply tariffs to every country - but only on sectors seen as critical to U.S. national or economic security, easing concerns about harsher and wider levies, Reuter reported. The dollar pared losses after Trump denied the report on his Truth Social platform.

"The Indian rupee, which made a fresh closing low of 85.82 on constant dollar demand from FPIs who were sellers of equity yesterday, is set to open at 85.75 on some losses by the dollar index. The rupee had risen up to 85.58 in yesterday's NDF trade but has not been able to sustain the rally as Trump denied the report that he was going with tariffs only on critical sectors," Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP, said earlier.

Bhansali expects the rupee to trade in Rs 85.65-85.90 range during the day, with exporters on the watchful side for hedging. The dollar is still a "buy on dips" for importers while exporters are advised to buy dips or trigger a stop loss of Rs 85.50.