Indian rupee opened Tuesday’s session on a stronger footing, appreciating 15 paise to 95.28 against the US dollar in early trade. The recovery was driven by a weaker US dollar overseas, softer crude oil prices and a positive start in domestic equity markets.
Currency dealers said easing crude prices improved sentiment as India imports most of its oil requirements. Lower oil prices help reduce the country’s import bill and ease pressure on the current account, providing support to the local currency.
The upbeat mood in equity markets also aided the rupee. The BSE Sensex traded over 300 points higher, while the NSE Nifty crossed the 24,500 mark, reflecting strong investor confidence. Continued foreign institutional investor (FII) inflows into Indian equities further strengthened the rupee’s position.
Globally, the US dollar remained under pressure as investors awaited fresh economic data and signals from the US Federal Reserve on the interest rate outlook. A softer dollar generally makes emerging market currencies, including the rupee, more attractive.
Despite the day’s gains, forex analysts expect the rupee to remain volatile in the near term. They said demand for dollars from importers, global geopolitical developments and changing expectations around US interest rates could influence the currency’s movement.
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