The rupee on August 19 surged to its highest level of the month on easing risk of additional US tariffs and optimism that the proposed GST reforms will give a boost to economic growth.
At 1.40 pm, the currency was trading at 87.1075 against the US dollar, sharply higher from 87.2450 at the open. The rupee ended the previous day at 87.3525.
The resumption of foreign fund buying in domestic equities and lower imported commodity prices such as precious metal and energy further provided support to the rupee, Dilip Parmar, a foreign exchange analyst at HDFC Securities, said.
“The upbeat sentiment and technical chart setup point to a potential move for USDINR toward 86.80, with 87.30 acting as a key resistance level,” Parmar added.
According to the Bloomberg data, the rupee has appreciated around 46 paise in past two trading sessions.
The next generation GST reforms announced by Prime Minister Narendra Modi in his 79th Independence Day address are expected to boost consumption.
The tax cuts, expected in October, coupled with faint hopes of progress on a Russia-Ukraine deal, could encourage foreign investors back into Indian equities, lending support to the rupee, traders said.
The finance ministry said the Centre has sent its proposal on GST overhaul to the group of ministers (GoM) constituted by the GST Council.
US President Donald Trump, who earlier this month slapped an additional 25 percent penalty on India for buying Russian oil over and above the 25 percent tariff, has said he will facilitate face-to-face talks between his Russian and Ukrainian counterparts to end the war.
It is unclear if the penalty will kick in from August 27 but if talks continue, there is a chance that Trump won’t go ahead with the levy, which he says is must to end Russia’s war on Ukraine. He has accused India of fuelling the war by buying Russian oil.
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