The Indian rupee appreciated by 5 paise to 86.26 against the US dollar in early trade on Tuesday, buoyed by a positive trend in domestic equity markets. However, the currency traded in a narrow range as uncertainty over global tariff developments kept forex markets cautious.
At the interbank foreign exchange, the rupee opened at 86.26, up from its previous close of 86.31. In initial trades, it also touched 86.29 against the greenback. On Monday, the rupee had depreciated by 15 paise amid foreign fund outflows and trade concerns.
According to forex traders, lingering doubts over global tariff alignments — especially ahead of the August 1 deadline for international trade agreements — have kept currencies in tight ranges. The dollar index, which measures the US dollar against six major global currencies, inched up by 0.03% to 97.88 as investors remained watchful of potential trade deals.
In commodities, Brent crude, the global oil benchmark, declined 0.81% to USD 68.65 per barrel in futures trade. Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, attributed the fall to fears of a brewing US-EU trade conflict, which could dent global economic activity and dampen oil demand.
Bhansali also noted that while foreign portfolio investors (FPIs) are showing strong demand for dollars, the RBI has been selling dollars at the upper end of the band to protect the rupee from excessive depreciation.
All eyes are now on the outcome of the ongoing India-US trade negotiations. A US delegation is expected to visit India in August for the next round of talks, following the conclusion of the fifth round of discussions last week in Washington. The looming August 1 deadline for tariff-related decisions could significantly impact Indian exports and the rupee if a deal is not reached or gets delayed.
In the domestic equity market, sentiment remained upbeat. The Sensex rose 149.47 points (0.18%) to 82,349.81, while the Nifty climbed 36.80 points (0.15%) to 25,126.20. Despite the positive equity cues, foreign institutional investors (FIIs) offloaded equities worth ₹1,681.23 crore on a net basis on Monday, as per exchange data.
With global uncertainty and key trade deadlines approaching, forex and equity markets are expected to remain volatile in the coming days.
