The Indian rupee advanced in early trade on Tuesday, strengthening by 18 paise to 90.12 against the US dollar, reversing part of its recent losses. The recovery came after four consecutive sessions of decline, during which the currency had weakened amid strong dollar demand and cautious global sentiment.
The rupee had closed the previous session near 90.30, weighed down by sustained pressure from importer dollar buying, foreign fund outflows, and elevated crude oil prices. On Tuesday, however, the local unit opened on a firmer footing as some of the dollar demand eased at higher levels, leading to short-covering by market participants.
Support also came from marginal weakness in the US dollar. The dollar index was trading slightly lower in the 103–104 range in early Asian trade, providing relief to emerging market currencies, including the rupee. Exporter selling of dollars further aided the rupee’s recovery during the morning session.
Crude oil prices remained a key overhang. Brent crude was trading close to $78–80 per barrel, a level that continues to pose risks for India’s external balances, given the country’s heavy dependence on oil imports. Elevated oil prices typically exert pressure on the rupee by increasing the import bill and widening the current account deficit.
Market participants noted that recent foreign institutional investor (FII) outflows from domestic equities had contributed to the rupee’s weakness over the past week. Volatility in equity markets and uncertainty over global growth and interest rate trajectories have kept foreign investors cautious.
Despite the day’s gains, analysts said the rupee’s outlook remains guarded. Movements in the dollar, trends in crude oil prices, and expectations around US monetary policy are expected to remain the key drivers of currency markets in the near term. Any sharp strengthening of the dollar or spike in oil prices could limit further appreciation in the rupee.
The Reserve Bank of India (RBI) is expected to continue closely monitoring currency movements. While the central bank has been intervening periodically to manage excessive volatility, it has largely allowed the rupee to move in line with broader market dynamics.
Going ahead, dealers expect the rupee to trade within a range of 90.00 to 90.40 in the near term, with gains capped by external pressures and support coming from intermittent dollar selling and possible RBI intervention.
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