Rupee gains on exporters' dollar sales, holds on to key support level

The Indian rupee ended higher on Thursday as speculators failed to take the unit below a well-recognised support level, with dollar sales by exporters also helping.

The rupee ended 0.2% higher at 85.26 to the U.S. dollar, compared to its previous close of 85.42.

The local unit had slipped to an intraday low of 85.6625 in the session, but managed to recoup losses as it failed to move beyond a "crucial" support zone of 85.70-85.80, said a foreign bank trader.


The rupee "seems poised to find support around the 85.80 level, with upside capped near 85 to a dollar," Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm, said.

"A period of consolidation within this range appears likely unless there is a significant downward shift in the dollar index," she said.

The dollar index fell on Thursday, surrendering some of the previous day's big gains after U.S. President Donald Trump backed down from threats to fire the head of the Federal Reserve and appeared to soften his stance on China.

The Trump administration would look at lowering tariffs on imported Chinese goods pending talks with Beijing, a source told Reuters on Wednesday.

"The dollar has further to run according to our models, but in our view requires Trump to deliver more positive news," ING Bank said in a note.

Longer-dated U.S. Treasuries steadied as Trump's reversal on Fed Chairman Jerome Powell seemed to ease the threat to U.S. monetary and fiscal credibility, with the 10-year yield 4 basis points lower at 4.35%.

Meanwhile, worries over rising tensions between New Delhi and Islamabad following a deadly militant attack in India's Kashmir region kept the rupee's gains in check, as per traders.

Dollar/rupee forward premiums rose on Thursday amid the escalating geopolitical concerns.