The Indian rupee strengthened by 15 paise to 95.28 against the US dollar in early trade on Tuesday, supported by a weaker greenback in global markets, easing crude oil prices and positive sentiment in domestic equities.
Forex traders said the local currency benefited from a decline in the US dollar index after investors turned cautious ahead of key economic data and central bank commentary. Softer crude oil prices also boosted sentiment, as lower energy costs are favourable for India, one of the world’s largest crude importers.
The rupee opened on a firm note and extended its gains during the morning session, recovering from losses recorded in the previous trading session. A positive opening in the domestic stock market further supported the currency, with the Sensex rising more than 300 points and the Nifty trading above the 24,500 mark. Improved risk appetite among investors also encouraged buying in emerging market currencies.
Market participants noted that sustained foreign institutional investor (FII) inflows into Indian equities continued to provide underlying support to the rupee. However, they cautioned that persistent demand for dollars from importers and uncertainty surrounding global trade developments could limit further appreciation in the near term.
The dollar index, which measures the US currency against a basket of major global currencies, remained under pressure, making emerging market currencies relatively more attractive. Meanwhile, Brent crude prices traded lower, easing concerns over inflation and India’s import bill.
Currency analysts expect the rupee to remain range-bound in the coming sessions as investors await fresh cues from global economic indicators and monetary policy signals from major central banks. Any sharp movement in crude oil prices, overseas fund flows or geopolitical developments could influence the currency’s direction.