Rupee Rises 8 Paise Against US Dollar in Early Trade on Equity Gains and Capital Inflows

The Indian rupee appreciated by 8 paise to open at ₹85.58 against the US dollar in early Tuesday trading, supported by strong cues from domestic equity markets and healthy foreign capital inflows. The currency had closed at ₹85.66 on Monday, marking a second straight session of marginal gains.

At the interbank foreign exchange market, the rupee opened at ₹85.62 and soon strengthened to ₹85.58. Gains were primarily attributed to positive sentiment in domestic equities and sustained foreign institutional investment.

On Monday, foreign investors bought net equities worth ₹1,992.87 crore, offering a crucial cushion for the currency amidst global uncertainties.

Despite these tailwinds, upward momentum for the rupee remained limited due to persistent global headwinds. Crude oil prices edged higher, with Brent crude futures rising 0.33% to $67.26 per barrel, while the US dollar index also advanced 0.2% to 99.13, reflecting strength against a basket of major currencies.

These developments typically exert downward pressure on emerging market currencies, including the rupee. Nevertheless, the domestic unit managed to hold firm within its recent trading band of ₹85 to ₹86, amid expectations of continued foreign inflows and stable economic fundamentals.

Investor attention remained focused on international developments, particularly US-China trade negotiations. Progress in those talks continues to shape broader risk sentiment and influence currency markets.

Adding to the supportive domestic environment, benchmark equity indices opened on a strong note.

The BSE Sensex rose by 99.12 points to 82,544.33, while the NSE Nifty advanced 32.15 points to 25,135.35. This equity rally further bolstered the rupee's early trade strength.

In summary, the rupee's rise in early trade reflected a combination of favourable domestic factors, including equity gains and capital inflows, even as global challenges such as stronger oil prices and a firm US dollar moderated the extent of appreciation. The currency is expected to remain range-bound in the near term, with daily movements shaped by both local and international drivers

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