Market News
Rupee wipes out all losses since Trump election win; shorts bail - REUTERS
MUMBAI, May 2 (Reuters) - The Indian rupee extended its rally on Friday, wiping out all losses since Donald Trump won the U.S. presidential elections in November 2024, with traders citing strong dollar inflows and short-covering amid rising hopes of a U.S.-India trade deal.
The rupee rose to a peak of 83.78 in early trading, up 0.8% on the day. The currency was at 83.93 per U.S. dollar at 10:35 a.m. IST.
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The Indian currency, which has risen nearly 2% so far this week, is trading above levels seen on November 6, when Trump's victory sparked a wave of dollar strength.
The rupee fell to an all-time low of 87.95 in February amid uncertainty over Trump's tariff policies, but recovered sharply over March and April on the back of portfolio inflows and hopes that India will be one of the first to sign a trade deal with the U.S.
There has been "short covering on reports of how a trade deal will route manufacturing to India mostly," a Singapore-based trader at a hedge fund said.
Exporters' dollar sales and a scaling back of bearish wagers on the rupee have also helped.
In fact, investors have ramped up bullish wagers on the rupee, alongside most of its regional peers, per a Reuters poll.
"We remain positive that India will emerge as one of the key winners under Trump 2.0, as a beneficiary of the next round of supply-chain shifts," analysts at Nomura said in a note.
Overseas investors snapped a three-month selling streak of Indian equities in April, helping hoist the rupee. Foreign institutional investors have bought Indian shares for 11 straight sessions, the longest run of inflows in two years.
The lack of aggressive dollar buying by India's central bank has also aided, traders said.
But the Reserve Bank of India had defended these levels sternly last year and there is a "strong chance" they start to buy dollars now, the trader at the hedge fund said.
On the day, the dollar index was down 0.1% at 100 while Asian currencies were mostly stronger with the offshore Chinese yuan up 0.3% amid fresh hopes of U.S-China trade talks.
