Rupee opens 13 paise up at 86.58 against US dollar

The local currency opened at 86.5800 against the US dollar, then traded at 86.6400 against the US dollar, as compared to 86.7125 against the greenback at previous close.

Indian rupee open 13 paise up at 86.58 against the US dollar on easing dollar index.

The local currency opened at 86.5800 against the US dollar, then traded at 86.6400 against the US dollar, as compared to 86.7125 against the greenback at previous close.

The dollar index, which measure American currency's value against six major global peers, fell to 106.193 in the early trade, against 106.612 in the previous session.

Amit Pabari, managing director at CR forex Advisors said a sharp decline in the dollar index has been a major tailwind for the rupee. The DXY has slipped towards 106.60, weighed down by multiple factors, including former U.S. President Donald Trump’s flexibility on tariffs and a weaker U.S. services PMI, which dropped to 49.7.

On February 21, the Reserve Bank of India (RBI) said it will conduct a longer duration dollar/rupee buy/sell swap to infuse durable liquidity into the banking system this week.

The RBI will conduct a three-year buy/sell swap worth $10 billion on February 28. The first leg of the transaction would be settled on March. 4.

This will be the second swap auction by the central bank in a month, after it infused $5.1 billion through a six-month swap on January 31.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP said the RBI’s 3 year BUY/Sell swap auction to ease the tightening liquidity position thus bringing premiums further down.