The Indian rupee opened flat on Friday at 85.4875 per U.S. dollar, slightly stronger than its previous close of 85.4900, buoyed by a dip in the dollar index and renewed optimism surrounding trade relations between the United States and China.
This cautious stability in the currency comes just days after a breakthrough announcement from Beijing. On June 27, China’s Ministry of Commerce confirmed a new trade agreement with the United States, sparking hopes of a thaw in the long-fraught economic tensions between the world’s two largest economies.
Under the agreement, China pledged to “review and approve export applications for controlled items” according to its laws, while the U.S. is expected to lift certain restrictive measures against Chinese firms — a move seen as a potential boost for global trade sentiment.
The news had an immediate impact on the greenback, as the dollar index (DXY) slipped to 97.203 in early trade, down from 97.401 at the previous close. The rupee’s resilience was also aided by foreign institutional investor (FII) inflows, strength in domestic equities, and easing global crude oil prices.
“Rupee is supported by FII inflows, equity gains, and falling oil prices,” said Kunal Sodhani, Head of Treasury at Shinhan Bank. “With the DXY hovering near a three-year low and soft U.S. GDP data reinforcing expectations of a rate cut, the bias remains in favor of emerging market currencies.”
Adding to the global dovish tilt, China’s manufacturing activity contracted for the third straight month in June, strengthening the case for further monetary easing by central banks worldwide.
On the technical front, Sodhani pointed out, “85.20 acts as a key support for USD/INR, while 85.90 remains the immediate resistance level.”
As traders eye upcoming U.S. economic data and central bank cues, the rupee may continue to benefit from a weakening dollar — although risks remain from fluctuating oil prices and geopolitical uncertainty. For now, the Indian currency appears well-anchored amid an improving global trade narrative.
