Indian rupee opened 14 paise higher on July 1 after the dollar index eased to fresh multi-year low over US fiscal worries and uncertainty around trade deals.
The local currency opened at 85.6150 against the US dollar, as compared to 85.7525 during the previous trading session.
Dollar index dropped to multi-year low as President Donald Trump's spending bill stoked fiscal worries and uncertainty around trade deals continued to weigh on sentiment.
Investors have also started wagering on a quicker pace of monetary policy easing by the Federal Reserve this year ahead of a slew of US economic data this week, headlined by Thursday's nonfarm payrolls report.
Dollar index, which measures the American currency against a basket of currencies, fell to 96.734 in the early morning trade, as compared to 96.875 in the previous trading session.
Dollar down 10% in first half of 2025, biggest fall since early 1970s
"US fiscal deficit concerns and Fed cut bets drive the US Dollar to multi-year lows. Hopes of trade deals between the US and partners are weighing on the safe-haven USD," Kunal Sodhani, head of treasury at Shinhan Bank said.
Investors are grappling with uncertainty over the US Senate's efforts to pass Trump's tax-cut and spending bill, which faces internal party divisions over its projected $3.3 trillion addition to the national debt. The fiscal concerns have dampened sentiment and prompted some investors to diversify.
The world's reserve currency is down more than 10%, its biggest first-half dive since the era of free-floating currencies began in the early 1970s.
"For the day range of 85.35-85.95 seems good enough as we may see the HDB Financial oversubscription amount getting returned while exports will hedge any uptick near to 86.00 levels," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
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