The Indian rupee extended its gains for a second consecutive session, rising by 33 paise to close at 85.77 (provisional) against the US dollar on Tuesday. The rally was driven by a strong performance in domestic equity markets and a weaker dollar globally amid ongoing uncertainties.
According to forex traders, the rupee was also supported by several key factors:
- A decline in global crude oil prices
- Favourable inflation data from India
- The US government’s recent decision to suspend an additional 26% tariff on Indian goods until July 9
At the interbank foreign exchange market, the rupee opened at 85.85 and touched an intraday high of 85.59 before settling at 85.77, marking a 33 paise gain from Friday’s close of 86.10. Forex markets were shut on Monday due to Ambedkar Jayanti.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that the rupee’s rise was fueled by a decline in the US dollar index and a surge in local markets. “Falling crude oil prices and positive macroeconomic indicators also supported the currency, though foreign institutional investor (FII) outflows limited further gains,” he added.
Looking ahead, Choudhary said the rupee may find support from overall weakness in oil prices. However, increased demand for dollars by importers and continued FII selling could limit sharp appreciation. He expects the USD-INR pair to trade in the ₹85.40–₹86.00 range in the near term.
The latest data from the government showed that wholesale price inflation dropped to a six-month low of 2.05% in March, as prices of food items like vegetables and potatoes declined.
Meanwhile, the dollar index — which tracks the greenback against six major currencies — was slightly down by 0.02% at 99.38, a level last seen on March 1, 2022.
In global energy markets, Brent crude slipped by 0.11% to USD 64.81 per barrel, marking a four-year low — a level last touched in April 2021.
On the domestic front, Indian equities witnessed a strong rally:
- The BSE Sensex surged 1,577.63 points (2.10%) to close at 76,734.89
- The NSE Nifty jumped 500 points (2.19%) to end at 23,328.55
Despite the upbeat mood, FIIs remained net sellers, pulling out ₹2,519.03 crore from Indian equities on Friday, as per exchange data.
