However, US President Donald Trump’s remarks on tariffs on India, FII outflows, and sustained weak sentiments at the domestic equity markets capped sharper gains in the rupee, according to forex traders.
At the interbank foreign exchange, the rupee opened at 90.22 against the US dollar and rose further to 90.12, up 18 paise from its previous close.
On Monday, the rupee stayed weak for the fourth straight session and closed 10 paise lower at 90.30 against the US dollar, as a surge in geopolitical uncertainty has bolstered the greenback’s appeal.
“Trump threatened India with more tariffs if India did not toe the line of not buying oil from Russia. The rupee continues to be hampered by the threats. There is a good chance for the rupee to go back to 91 levels with the trade deal not happening in near future,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
The US has carried out a military operation in Venezuela and deposed President Nicolas Maduro. President Trump said the US would “run” the South American country and tap its vast oil reserves to sell to other nations.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.04 per cent higher at 98.22. “The US dollar index fell to 98.31 levels after the US ISM Manufacturing PMI came lower than expected at 47.9, giving market indication of rate cuts due to a weakening economy,” Bhansali added.
Brent crude, the global oil benchmark, was trading 0.31 per cent lower at USD 61.57 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex declined 431.95 points to 85,007.67 in early trade, while Nifty was down 105.6 points to 26,144.70.
Foreign institutional investors offloaded equities worth Rs 36.25 crore on Monday, according to exchange data.
