Rupee retreats to 90.44 after deal-fuelled surge

MUMBAI: The rupee slipped 17 paise to close at 90.44 against the dollar on Wednesday, retreating after a sharp 124-paise surge in the previous session that followed news of a trade deal being finalised between India and US.Dealers said the rally lost momentum as the market failed to see follow-through demand, particularly from foreign institutional investors. The absence of large-ticket dollar sales by overseas investors meant the rupee was unable to build on Tuesday’s gains, despite the positive sentiment generated by the trade agreement. The pullback came amid a cautious global backdrop, with risk appetite weakening as global equity markets fell on concerns over AI-led disruption in the technology sector. European stocks slipped from record highs, US futures remained under pressure after a sell-off in software shares, and volatility persisted across asset classes.“If the US-Iran tensions cools off then the weakness of the Rupee is temporary. The short/ medium term range of the Rupee seems to shift towards 89.50 to 90.60/70,” said KN Dey, a forex consultant. He added that there was a possibility of the rupee briefly touching 91.Traders said the rupee’s sharp move on Tuesday had already priced in much of the optimism around the trade deal, leaving little immediate upside without fresh flows. With no major foreign inflows and global risk sentiment turning cautious, the currency gave up part of its gains, ending the session weaker but still well above last week’s levels.In commodity markets, gold extended its rebound, posting its biggest two-day gain in over 17 years, while oil prices stayed elevated after briefly spiking on fresh geopolitical tensions involving the US and Iran.