Finance
The Indian Rupee rose to its highest level in August as the currency strengthened past the 86 mark on Tuesday on strong economic hopes, softening geopolitical tensions and a fall in crude oil prices.
The domestic currency closed 40 paise or 0.45 per cent higher at 86.95 against the dollar on Tuesday, according to Bloomberg. It reached the 86.92 mark during the day, but it eventually gave up part of its gains. The currency has lost 1.57 percent of its value so far this year.
The Center’s plan to simplify the intricate GST system into two slabs of 5% and 18%, with a 40% bracket set aside for sin items, was the main driver of the currency’s increase. The prime minister had promised “a double Diwali” in his Independence Day speech.
Leaders of the US, Ukraine, and the European Union have expressed confidence in the pace of peace talks, raising the possibility that Russia’s conflict in Ukraine may soon come to an end.
Following PM Modi’s announcement of a GST decrease, S&P raised India’s economic forecast, which led to a significant positive move for the rupee, according to Jateen Trivedi, VP Research Analyst-Commodity and Currency at LKP Securities.
The S&P upgrade shows confidence in India’s economic prospects, even though US tariffs are still a worry. He noted that ahead of PM Modi’s August 29 visit to Japan, positive triggers from India-Japan ties also surfaced, further boosting optimism. “With FIIs showing reduced selling pressure, the rupee is expected to trade in a range of 86.60-87.25.”
Two weeks after closing near a new record low, the Reserve Bank of India’s (RBI) assistance and the unwinding of long dollar bets kept the rupee from reaching a new low.
As Trump held talks on ending the war in Ukraine and traders lowered their predictions on a September rate drop ahead of Federal Reserve Chair Jerome Powell’s speech, the Rupee today also brushed off any significant influence from the soaring dollar, which surged to 98.21 on Tuesday.
At 98.02, the dollar index, which compares the US dollar to a basket of six major currencies, was up 0.15 percent.
Crude oil prices were declining in the commodities market due to optimism around trilateral negotiations with Russia. As of 3:45 PM IST, the price of Brent crude was down 0.92 percent at 65.99 a barrel, while the price of WTI crude was down 0.98 percent at 62.8.
Source: BS
