Rupee Continues Recovery, Gains 27 Paise in Early Trade
The Indian rupee extended its recovery for the second consecutive session, appreciating by 27 paise to reach ₹86.52 against the US dollar in early trade on Wednesday. The domestic currency was supported by a decline in global crude oil prices and regulatory measures introduced by the Reserve Bank.
Despite this upward movement, analysts noted that gains remained restricted due to fluctuations in domestic equity markets, persistent outflows of foreign capital, and a stronger US dollar, influenced by global trade uncertainties. At the interbank foreign exchange market, the rupee opened at ₹86.44, briefly touched a high of ₹86.36, and later settled at ₹86.52 in morning transactions.
On the previous day, the Indian rupee surged by 66 paise—its highest single-day gain since March 2023—closing at ₹86.79. This followed a dramatic turnaround from Monday’s steep intraday decline, where the currency briefly approached the 88-per-dollar mark before rebounding to ₹87.45 by the session’s end.
Global Factors Influence Currency Movements
Meanwhile, the US dollar index, which tracks the performance of the greenback against a basket of major currencies, remained elevated at 107.91, reflecting a 0.07% increase. The strengthened dollar was primarily attributed to escalating trade disputes following the imposition of a 25% tariff on aluminum and steel imports into the United States.
Brent crude, the international oil benchmark, declined by 0.31% to trade at USD 76.36 per barrel in futures markets. A drop in oil prices typically provides relief to net-importing nations like India, contributing to a stronger rupee.
However, financial analysts cautioned that continued volatility in global markets and economic policies of major economies could keep currency fluctuations unpredictable in the coming days.
Domestic Market Performance and Foreign Investment Trends
In the domestic equity market, major indices witnessed a decline during early trading hours. The benchmark BSE Sensex dropped by 259.89 points, or 0.34%, to reach 76,033.71, while the NSE Nifty slipped 72.40 points, or 0.31%, to 22,999.40. The downturn was attributed to profit-booking by investors and global market sentiment.
Additionally, foreign institutional investors (FIIs) continued to pull out capital from Indian markets. Data from the stock exchanges showed that FIIs offloaded equities worth ₹4,486.41 crore on a net basis on Tuesday. Analysts believe this trend could further impact the Indian rupee’s movement in the near term, depending on global economic cues and domestic fiscal policies.
