The Rupee strengthened to a two-week high on Thursday, buoyed by a weak Dollar, which slipped below the 97 mark for the first time since March 2022.
The Indian unit closed at 85.7050 per US Dollar, up about 39 paise against the previous close of 86.09.
The Dollar is reeling under pressure as US President Donald Trump emphatically stated that interest rates should be at least 200-300 bps lower.
However, US Fed Chair Jerome Powell has stood his ground, preferring a status quo on the rates for now in order to assess the impact of Trump tariffs on inflation.
Trump has allegedly called Powell names for not cutting interest rates. This is probably the first time a US President is publicly taking on a US Federal Reserve Chair.
The Indian unit tracked the strengthening trend in Asian currencies on Thursday, said forex market traders.
Amit Pabari, MD, CR Forex Advisors, observed that as the Dollar Index slipped towards 97, hitting multi-year lows, fears of US President Trump considering replacing Jerome Powell have triggered concerns about Fed independence.
Adding fuel to the dollar’s weakness, Trump’s turbulent tariff policies loom large as the trade deadline approaches on July 9.
On the commodity front, Brent crude prices eased below $66/barrel, which will help narrow down India’s trade deficit and import bill management.