Rupee strengthens against USD post report on US-China trade deal

Indian rupee strengthened against US dollar on Friday after President Donald Trump tweeted that US and China are very close to reaching a trade deal, which is believed to have strengthened investor sentiments. Besides, firm domestic equities also supported the domestic currency. However, foreign fund outflows, spike in crude oil prices and fear of a further rise in retail inflation weighed on the local unit and restricted its gains.

The exchange data showed that foreign institutional investors (FIIs) sold shares worth Rs 683.83 crore on Friday. On the domestic front, rising food prices pushed the retail inflation in November to over 3-year high of 5.54 per cent, while the industrial sector output shrank for third month in a row by 3.8 per cent in October, indicating deep slowdown in the economy.

On the global front, the pound hit multi-year highs against its peers as early UK election results pointed to a convincing Conservative win, which is expected to clear the Brexit political gridlock that has hounded Britain’s markets for years.

The currency touched a high and low of 70.6700 and 70.5050 respectively. The reference rate for the dollar stood at 70.86 and for Euro, it stood at 78.58 on December 13, 2019.