Rupee opens 5 paise up at 86.47 dollar as dollar index eases

Indian Rupee

The rupee opened 5 paise up on July 28 on an easing dollar index following US-EU trade deal even as the clock ticks down on August 1 tariff deadline for India  and ahead of the Federal Reserve meeting.

The currency opened at 86.47 against the dollar after closing the previous session at 86.52. The US-EU trade deal, announced over the weekend, saw the  dollar index slip a tad at 97.61 after the previous close of 97.65, helping the rupee to open higher.

On July 27, US President Donald Trump announced he had struck a trade deal with European Union after the European Commission president Ursula von der Leyen travelled to Scotland for talks with the American leader to push the long-drawn deal over the line.

"We have reached a deal. It's a good deal for everybody," Trump told reporters after talks with von der Leyen at his golf resort in Turnberry, Scotland. The EU chief also hailed it the "good deal".

The deal, which includes a 15 percent tariff on EU goods entering the United States and significant purchases of US energy and military equipment, will bring welcome clarity for EU companies.

"We are agreeing that the tariff straight across, for automobiles and everything else, will be a straight across tariff of 15 percent," Trump said.

Currency traders will watch for upcoming US Federal Open Market Committee Meeting (FOMC) meeting, which begins July 29 and August 1 deadline for the imposition of trade tariffs, experts said.

"The market sentiment is to remain cautious due to upcoming global events listed above as also the August 1 deadline from Trump on tariffs. FPIs having been making portfolio outflows keeping dollar well bid and further weakness could accelerate it," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

"In the near term, the rupee is likely to trade in a range of 86–87," said Jateen Trivedi, VP Research Analyst, commodity and currency, LKP Securities.