Rupee Likely to open higher as compare to previous close

Rupee Likely to open higher as compare to previous close

16 May 2019 08:49 AM

The Indian rupee is expected to open higher against the dollar after U.S. equities extended their gains, helping mitigate the impact from rising crude oil prices and a wider-than-expected trade deficit at home.

The rupee is expected to change hands around 70.23-70.28 in early trade versus the dollar compared with its previous close of 70.3350.

The primary reason for the rupee to open higher despite rising oil and the negative trade data is offshore dollar-selling interest, which has kept a lid on NDF’s (non-deliverable forward). Had it not been for that, the rupee probably would have opened lower, considering where oil is.

U.S. equities rose for the third time in four days on Wednesday, helped by reports that U.S. officials could travel to Beijing. President Donald Trump may delay auto tariffs on Japan and the European Union also helped sentiment.

Meanwhile, data released late yesterday showed that India’s trade gap widened to $15.3 billion in April from $10.9 billion in the previous month. The trade gap was wider than $13.7 billion in the same month last year and also exceeded the $13.5 billion forecast.

The widening of the trade balance was primarily led by significant weakness in exports, pointing to the 7% month-on-month seasonally adjusted decline in exports. Non-oil non-gold import's growth declined 1.0% month-on-month in April. This is consistent with a slightly slower domestic activity in April.

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