By Ashwin Manikandan and Nimesh Vora
MUMBAI (Reuters) – The Indian rupee declined on Thursday with traders treading lightly ahead of the Trump-Putin summit, although S&P’s upgrade offered a silver lining.
The rupee closed at 87.5500 against the U.S. dollar, softer than Wednesday’s close of 87.4400, navigating a choppy session that saw it swing between 87.39 and 87.67.
With the focus squarely on the Trump-Putin meet, the S&P’s upgrade of India offered a boost to the local currency right when it was grappling with midday pressure.
S&P noted that India’s robust external position is a key credit strength. It highlighted that current account deficits are likely to remain small over the next few years, while domestic demand stabilises and a weaker rupee boosts competitiveness.
The agency further pointed to the rupee’s active trading status, noting it accounts for more than 1% of global foreign exchange turnover.
“In the shorter term, we may see some relief on the ratings upgrade, but the rupee is still not out of the woods as trade uncertainties persist and broad economic indicators are still weak,” said Dilip Parmar, currency analyst at HDFC Securities.
The Trump-Putin meeting to discuss the Russia-Ukraine war holds added significance for the rupee. The U.S. president has criticised India’s purchase of Russian oil and imposed an extra 25% tariff on its goods effective August 27, doubling the rate to 50% – the highest U.S. tariff on a country alongside Brazil.
The currency unit touched 87.8850 last week after Trump’s tariffs salvo, with the Reserve Bank of India stepping in to prevent the rupee from breaching the all-time low of 87.95 – a level bankers believe the central bank will continue to defend.
Meanwhile, the U.S. dollar index was up 0.1% at 97.835 at 1550 IST.
(Reporting by Nimesh Vora; Editing by Janane Venkatraman)
