Due to the fall in the dollar, an increase in the rupee was seen on Tuesday.Image Credit source: ChatGPT
Due to India-EU trade deal, rise in stock market, increase in forex reserves and fall in dollar index, the rupee made a huge comeback in the currency market on Tuesday. On Friday, the rupee had fallen near Rs 92 against the dollar. From where the rupee has made a tremendous comeback on Tuesday. The market was closed on Saturday and Sunday. Due to Monday being a holiday on the occasion of Republic Day, the rupee did not disappoint investors and traders at all in the open market on Tuesday. The rupee benefited greatly from the fall in the dollar index.
However, selling by foreign investors and rise in crude oil prices were also seen. If these two factors had not come to the fore, further appreciation in the rupee could have been seen. If experts are to be believed, further increase in rupee value may be seen in the coming days. The reason for this is the announcement of trade deal between India and EU. After which the possibility of a trade deal between India and America has increased soon.
Experts estimate that now America can also show speed in making trade deals with India. Apart from this, trade talks between India and Canada can also start in March. The effect of which can also be seen. Let us also tell you what kind of rise in the rupee was seen on Tuesday.
Rupee’s comeback against dollar
Recovering from its all-time low, the rupee on Tuesday closed 19 paise higher at 91.71 (provisional) against the US dollar amid a fall in the US dollar index and India-EU FTA talks. Foreign currency traders say that the slight improvement in the rupee was due to traders’ haste to overcome the widespread weakness of the dollar. Apart from this, India-European Union FTA boosted the sentiment in the domestic market. However, rising commodity and crude oil prices limited the sharp gains.
At the Interbank Foreign Currency Exchange market, the rupee opened at 91.82 and fell to a low of 91.90 during the day. The Indian rupee ended the day at 91.71 (provisional), showing an increase of 19 paise from the previous closing price. On Friday, the rupee had hit a historic low of 92 against the dollar and closed at 91.90 with a marginal gain. Foreign exchange and stock markets remained closed on Monday on the occasion of Republic Day. This means that the currency market was opened after a holiday of three days.
Will the rupee rise further?
Mirae Asset Sharekhan’s Research Analyst Anuj Chaudhary said that we expect India-EU Free Trade Agreement (FTA) to strengthen the sentiments of the domestic market, hence a slight positive trend will be seen in the rupee. Weakness in the US dollar index can further strengthen the rupee. However, the rupee may come under further pressure due to selling pressure by foreign investors (FIIs) and ongoing geopolitical tensions. Chaudhary further said that America has threatened to impose 100 percent tariff on Canada and increase the tariff on South Korea from the current 15 percent to 25 percent. The spot price of Dollar-Indian Rupee (USDINR) is expected to be between 91.30 to 92.
India-EU trade deal announced
Meanwhile, India and the European Union on Tuesday announced the completion of negotiations for a free trade agreement (FTA), under which several domestic sectors like apparel, chemicals and footwear will get duty-free entry into the 27-nation grouping, while the EU will get entry into the Indian market with concessional duties on cars and liquor, an official said. This agreement is being called the “Mother of All Deals” because it will create a market of about 2 billion people.
decline in dollar index
Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, was trading 0.12 per cent lower at 96.92. In the last one week, a decline of 1.74 percent has been seen in the dollar index. At the same time, in the month of January, there has been a decline of about one and a half percent against the dollar. However, in the last one year the dollar index has seen a decline of more than 10 percent.
Crude oil price rises
There is an atmosphere of rising crude oil prices in the international market. There is an increase of 0.35 percent in the price of crude oil i.e. Brent crude oil of Gulf countries. Due to which the price of Brent crude oil has come down to $65.84 per barrel. Whereas the price of American crude oil has also seen a rise. If we look at the data, American crude oil is showing an increase of 0.46 percent. After which the price of WTI oil has become $60.91 per barrel.
stock market rise
Talking about the domestic stock market, there has been an increase for many days. Last week there was a fall of more than 2000 points in Sensex. But when the stock market closed on Tuesday, the Sensex rose 319.78 points and closed at 81,857.48. There was also a rise in Nifty and it increased by 126.75 points to reach 25,175.40. According to experts, due to EU-India FTA, there may be a rise in the stock market in the coming days.
surge in forex reserves
Whereas last week the figures of Forex reserves came on the last trading day. In which a record increase was seen. If we look at the figures, according to the information given by the Reserve Bank of India, during the week ending January 16, India’s foreign exchange reserves increased by US $ 14.167 billion to US $ 701.36 billion. Last week, total reserves had increased by US $ 392 million to US $ 687.193 billion.
Selling by foreign investors continues
According to NSDL data, foreign institutional investors sold shares worth Rs 4,113.38 crore on Friday. If we look at the figures, foreign investors are continuously making profits from the stock market. In the month of January, profit booking of Rs 36,811 crore by foreign investors has been seen. Selling by foreign investors was also seen in the months of November and December last year. According to experts, due to the trade deal between India and EU, confidence in the Indian market from foreign investors may be seen increasing.
What will Trump do?
After the India and EU trade deal, the pressure on America to make a trade deal with India has increased. According to experts, many problems have ended due to India’s trade deal with the EU. Now India will not need to depend only on America for exports. In such a situation, if India’s exports reduce from America and move towards Europe, then Indian goods can also go to America via Europe. Due to which Europe will also benefit along with India.
At the same time, Indian goods will cost more to America. In such a situation, doing a direct deal with India will be a beneficial deal for America. Apart from this, there are going to be talks between India and Canada in the month of March on many issues including uranium and energy. This means that the trade talks that had been stalled since the month of November can start again. In such a situation, there is no other option left for America or Trump except to make a trade deal with India.