Mumbai: The rupee edged up by 3 paise to 88.72 against the US dollar in early trade on Tuesday, supported by a decline in crude oil prices and positive momentum in domestic equity markets.
However, a slightly stronger dollar and continued FII outflows limited further gains in the local currency, forex traders said. Market participants are also awaiting the Reserve Bank of India’s (RBI) Monetary Policy Committee decision, scheduled for Wednesday.
At the interbank foreign exchange, the rupee opened at 88.73 per dollar and strengthened marginally to 88.72, up 3 paise from its previous close. On Monday, the currency had consolidated in a narrow range before ending 3 paise lower at 88.75.
“FPIs continue to sell equities, weighing on the rupee whenever it gains. With no fresh updates on the India-US trade pact, markets are focused on the RBI’s policy announcement on Wednesday,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
The RBI meeting comes amid ongoing geopolitical tensions and the US imposing 50% tariffs on certain Indian shipments.
The dollar index, which measures the greenback’s strength against six major currencies, was trading slightly higher at 97.94, up 0.04%. Meanwhile, Brent crude futures fell 0.79% to USD 67.43 per barrel.
“Brent prices declined due to increased exports from Kurdistan to Turkey, OPEC+ planning further production hikes in November, and the potential impact of a US government shutdown on demand,” Bhansali added.
In domestic equities, markets rebounded in early trade, with the Sensex climbing 312.88 points to 80,677.82 and the Nifty rising 96.9 points to 24,731.80. Foreign Institutional Investors sold equities worth Rs 2,831.59 crore on Monday, according to exchange data.
Separately, the US announced that from October 1, a 100% tariff will apply to branded or patented drugs imported from India, except for projects by pharmaceutical firms constructing manufacturing plants in the US. The exemption applies to sites where construction has already begun, including those under development or partially built.
