Rupee Extends Gains Amid Dollar Weakness

MUMBAI: The Indian rupee continued its upward trend on Monday as the US dollar remained weak. Investor confidence in US assets was impacted by President Donald Trump’s remarks regarding the Federal Reserve chairman.

The rupee’s closing value was 85.1275 against the US dollar, reflecting a 0.3% increase for the day. Earlier in the session, the local currency reached a peak of 85.0450 against the dollar, marking a high point for over two weeks, before slightly decreasing its gains.

Other Asian currencies also experienced a boost, with the Thai baht and Malaysian ringgit leading the gains, each rising by almost 1%. The dollar index fell by 0.8% to reach 97.9, its lowest level in over three years.

President Trump’s criticism of the Federal Reserve has further diminished investor trust in US assets. Concerns over the consequences of US trade tariffs were already weighing on these assets.

“The primary focus for markets may be the unfolding situation between President Trump and Fed Chair Powell, potentially heightening concerns about US exceptionalism,” MUFG Bank noted.

While the rupee benefited from a weaker dollar and offers from foreign banks on Monday, bids from importers and state-owned banks limited the currency’s advance, according to traders.

Dollar bids made by state-run banks also led traders to believe that the Reserve Bank of India might be absorbing dollar inflows to build up its foreign exchange reserves.