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Rupee Heads for First Weekly gains in Five - HDFC Securities 

* Indian rupee heads for a first weekly gain after falling for four weeks in a row. Rebound in risk sentiments, weaker dollar index and better than expected economic data supported local unit to erase early week losses. However, the worries remain intact from rising crude oil prices and ballooning trade deficits.

* India’s trade deficit in May widened to $23.33 billion from $6.53 billion in the same period last year as the country’s petroleum import bill almost doubled with a surge in global crude oil prices. Merchandise exports in May were $37.29 billion, an increase of 15.5% from $32.30 billion a year ago while Goods imports in May were $60.62 billion, an increase of 56.1% from $38.83 billion last year.

* On Thursday, spot USDINR gained 9 paise to 77.61. The pair has been consolidating in a narrow range of 77.70 to 77.40 since mid-May month.

* Asian shares followed their US peers higher Friday ahead of a key jobs report as traders weighed the outlook for inflation and growth. Markets are shut in Hong Kong and China.

* Dollar Spot Index falls 0.7%, marking its biggest one-day drop since May 23, declines follow the best two-day run in four weeks that came at the back of stronger-than-expected US economic data and enhanced expectations for Federal Reserve rate hikes. The US dollar weakened against all of its major G-10 counterparts as a pickup in risk sentiment boosted stocks. The euro gained as options traders focus on next week’s policy meeting, commodity currencies got a lift from a reversal in oil prices and the offshore yuan gained on a report of support for sectors hit by the pandemic.

* Meanwhile, OPEC+ agreed to increase the size of its oil-supply hikes by about 50% in July and August, bending to pressure by major consumers including the US to fill the gap created by sanctions on Russian supplies. Yet oil fluctuated after recent gains and remains an important driver of inflationary pressures.

USDINR

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