Rupee surrenders early gains to settle low against US Dollar today. It ended at 75.58 provisionally registering a drop of 10 paise since the last close. Decisive run of the financial market, reopening of the domestic economy, and a weak US Dollar index could not support Rupee amid the trade tension between US-China.
At the interbank exchange market, Rupee rallied between a high of 75.37 and low of 75.64 before settling low. The positive sentiment of global investors shattered after the announcement by the US Government to introduce stimulus postponed for next week. The current market situations will decide the fate of Rupee against US Dollar.
USD/INR – Crude Price Surges with Optimism
Brent crude oil rose by 2.4% to USD 40.94 per barrel after surging more than USD 1 during the session. Also, US WTI crude climbed by 1.7% to USD 38.05 per barrel nearing the USD 40 mark. Brent crude witnessed a surge of around 16% in this week registering 3-months high after the crash in April. WTI crude rose nearly 14% this week with support from production cuts and reopening of economies for fuel demand.
INR to remain under against USD pressure with the surge in crude oil prices. The meeting between OPEC+ cleared the confusion and helped crude price increase. Russia and Saudi Arabia are positive on production cut up to 9.7 million BPD for July; however, OPEC+ council thinks otherwise. They remain optimistic on the growth of fuel demand after reopening of world economies that will support crude price, and extended output cuts would not be needed.
USD/INR – Gold Price Declines
Spot gold slumped by 0.2% to USD 1708.07 per ounce. US Gold futures was down by 0.9% to USD 1711.80 per ounce. Gold headed towards 3rd consecutive drop with US Dollar index losing 1.5% this week. Gold market is under pressure due to positive growth in domestic financial market surging high. SPDR gold trust holdings dipped 0.1% to 1132.21 tonnes as of yesterday.
The rising hopes of recovering economies and the introduction of more than expected stimulus by the European Central Bank will help gold demand stay low. However, Gold will benefit from more stimulus and low-interest rates used as a hedge against inflation. Gold futures declined more than 1% this week with spot gold dropping 3% from the 7-year high mark. There is still hope for gold to rise with trade tensions, 2nd wave of Coronavirus and weakening of US/INR Dollar index.