The rupee gained 17 paise to trade at 86.28 against the US dollar in early morning trade on Tuesday, supported by a weakening dollar index and lower crude oil prices.
Forex traders noted that the US dollar retreated from its 109 levels but recovered to 108.31 after Donald Trump announced tariffs on Canada and Mexico, while holding off on imposing tariffs on China.
Despite lingering concerns over tariffs, traders adjusted their expectations, anticipating that any imposed tariffs would likely be less severe.
On the interbank foreign exchange, the rupee opened at 86.28, marking an increase of 17 paise from its previous close of 86.45 against the US dollar. The local currency also touched 86.43 against the greenback in early trade.
The dollar index, which measures the dollar against a basket of currencies, was down 0.94 percent at 108.31. Meanwhile, Brent crude, the global oil benchmark, declined by 0.05 percent to $80.11 per barrel.
India’s markets faced a mix of pressure and optimism. The rupee has been under pressure due to significant foreign institutional outflows amounting to $6.73 billion this month, according to CR Forex Advisors MD Amit Pabari.
However, the rupee rebounded to 86.20 levels as US bond yields softened. Pabari highlighted that hopes persisted due to a positive budget outlook and strong earnings season indicating signs of recovery.
In the domestic equity market, both the Sensex and Nifty experienced volatile trading. The Sensex initially opened higher but later slipped into negative territory, trading down 111.83 points or 0.15 percent at 76,961.61. Similarly, the Nifty was down 1.90 points or 0.01 percent at 23,342.85 after starting on a positive note.
Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Monday, offloading shares worth ₹4,336.54 crore, as per exchange data.
Overall, the market dynamics reflected a cautious sentiment as investors navigated through a mix of global and domestic factors influencing currency and equity markets.