Rupee Rises 21 Paise to 85.34 Against US Dollar Amid Trade Deal Optimism

Mumbai, July 4: The Indian rupee saw a significant appreciation in early trade on Friday, rising by 21 paise to 85.34 against the US dollar. This gain was largely driven by positive sentiment across broader Asian currencies, spurred by renewed optimism surrounding US-led trade deals.

The domestic currency commenced trading at 85.44 in the interbank foreign exchange market before strengthening to 85.34, marking a notable improvement from its previous close of 85.55 on Thursday.

Trade Optimism Lifts Asian Currencies

The surge in the rupee and other Asian currencies is primarily attributed to US President Donald Trump’s recent announcement of a trade agreement with Vietnam. This development has ignited hopes for further trade pacts to be finalised before the critical July 9 tariff deadline, boosting overall market confidence.

Key Levels to Watch

Amit Pabari, Managing Director at CR Forex Advisors, indicated that with the July 9 deadline and President Trump’s “One Big Beautiful Bill” in focus, markets remain vigilant. “The rupee is expected to find solid support around 85.20 and could trade in a wide range, facing resistance between 86.20 and 86.40,” he said.

Global Cues and Oil Prices

The US dollar index (DXY) slipped 0.20 percent to 96.98, which provided a tailwind for emerging market currencies like the rupee. Conversely, Brent crude futures initially declined by 0.38% to USD 68.54 per barrel. However, concerns for India, a net oil importer, persist as Brent prices were observed to be inching up again, hovering around USD 68.20.

Market Snapshot (as of 10:45 AM)

In the domestic equity markets on Friday, the Sensex was slightly up by 24.51 points at 83,263.98, and the Nifty was up 9.80 points to 25,415.10.

Foreign institutional investors (FIIs) continued their selling trend, withdrawing ₹1,481.19 crore from Indian equities on Thursday, as per exchange data.

Services Sector Shows Strong Growth

On the macroeconomic front, India’s services sector demonstrated robust activity in June, reaching a ten-month high. This was primarily fueled by strong international sales and sustained job creation. The HSBC India Services PMI Business Activity Index rose to 60.4 in June from 58.8 in May, signalling a sustained improvement in demand and new orders.

These positive economic indicators, coupled with a softer US dollar and growing trade optimism, collectively provided crucial support to the rupee’s upward movement in early Friday trade.

Future Outlook

The rupee’s near-term trajectory will likely depend on how global trade negotiations unfold ahead of the July 9 tariff deadline. A stable or softer US dollar, coupled with easing oil prices, could support further appreciation. However, continued FII outflows and volatility in global crude markets may cap sharp gains. Traders will also keep an eye on upcoming US economic data and domestic macro indicators for directional cues. The rupee is expected to trade within a broad range of 85.20–86.40 in the coming sessions.

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