Indian Currency: According to forex traders, the rupee's gains were limited due to continued withdrawal of foreign investors, rising crude oil prices and slight strengthening of the US dollar.

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Rupee vs Dollar: The RBI's Monetary Policy Committee's decision to keep the repo rate unchanged and maintain a positive growth outlook also impacted the rupee on Friday. The Indian rupee strengthened by 11 paise to 90.23 against the dollar at the start of the week's final trading day. Investors remained confident about the policy, supporting the rupee in early trading.

Why is the rupee rising?

However, according to forex traders, continued foreign investor outflows, rising crude oil prices, and a slight strengthening of the US dollar limited the rupee's gains. The rupee opened at 90.28 in the interbank foreign exchange market and strengthened to 90.23 per dollar during trading, a gain of 11 paise over its previous close. A day earlier, on Thursday, the rupee had also gained 13 paise to close at 90.34.

Meanwhile, the dollar index, which shows the dollar's position against six major currencies, was at 97.85 with a gain of 0.04 percent. Domestic stock markets witnessed pressure in early trade, where the Sensex fell 225.15 points to 83,088.78 points and the Nifty slipped 89.25 points to 25,553.55 points. In the international market, Brent crude rose 0.33 percent to $67.77 per barrel. According to stock market data, foreign institutional investors (FIIs) were sellers on Thursday and sold shares worth Rs 2,150.51 crore.

What are the experts saying?

Despite the heightened expectations surrounding a trade deal, the foreign exchange market is now displaying more caution than enthusiasm. Forex traders say investors are currently focusing on facts and confirmation rather than celebration, as no official documents have been released yet, nor have the final terms been formally made public by either country.

Apart from this, the market is also keeping an eye on the interest rate announcement of the Reserve Bank of India (RBI) on Friday, which may give indications about the future direction.

According to Anuj Chaudhary, research analyst at Mirae Asset Sharekhan, the rupee could trade with a positive bias amid hopes of an India-US trade deal. However, he cautioned that weakness in the domestic stock market and a strengthening US dollar could limit the rupee's upside.

Chowdhury also said that high crude oil prices and rising tensions between the US and Iran could keep upward pressure on the rupee. Therefore, investors are closely monitoring signals from the RBI's monetary policy.