MUMBAI: The rupee closed at 86.04 against the dollar on Friday, gaining 64 paise from Wednesday’s close. However, it ended the week 0.9% weaker, marking its worst weekly performance in two months. The decline followed last weekend’s rally when the currency had strengthened to 84.97.
The rupee’s recovery came as the dollar weakened globally. The dollar index dropped 0.7%, hitting a three-year low amid rising concerns of a US recession. The shift in US trade policy and its fallout have driven investor sentiment away from US assets, benefiting Asian currencies. The offshore Chinese yuan edged up 0.1%, while the euro climbed 1.4% to $1.13.
China raised tariffs on US goods to 125% in response to the US imposing 145% tariffs. The US had announced a 90-day pause in tariffs for all countries except China. The euro, yen, and Swiss franc gained as the dollar came under pressure, reversing its safe-haven appeal. Traders unwound their short positions on the rupee, worried by the dollar’s losses.
The rupee rose to an intra-day high of 85.96 but demand for dollars from importers prevented it from holding below the 86 mark. Market participants are closely tracking the yuan for cues on the rupee’s trajectory. A weaker yuan could push up USD/INR, though dollar weakness may temper that move.