The rupee appreciated 9 paise to 87.10 against the US dollar in early trade on Wednesday, fuelled by the broad weakening of the US dollar and easing crude oil prices.
Forex traders said US President Donald Trump’s tariff escalation has set off a chain reaction in global markets, sending the dollar into a downward spiral.
Rupee is expected to trade with a slight negative bias as fears of a prolonged trade war continue to grip the financial world, they said.
At the interbank foreign exchange, the rupee opened at 87.18 against the greenback, then gained some ground and touched 87.10 against the greenback, up 9 paise from its previous close.
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On Tuesday, the rupee rebounded from initial losses and settled with a gain of 13 paise at 87.19 against the US dollar.
“The rupee traded in a narrow range, caught between global uncertainty driven by Trump factor. Moreover, persistent FII selling, with USD 128 million offloaded in the last session and total outflows nearing USD 12 billion this year, continues to weigh on the rupee amid ongoing geopolitical volatility,” CR Forex Advisors MD Amit Pabari said.
Meanwhile, the US dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.07 per cent lower at 105.67.
“However, falling crude oil prices provided some respite for the Indian currency with Brent crude prices touching a three-month low of $69.65 per barrel would ease India’s import burden and offer modest support to the rupee,” Pabari said.
Brent crude, the global oil benchmark, was trading 0.41 per cent lower at $70.76 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex was trading 509.70 points, or 0.70 per cent, higher at 73,499.63 points, while the Nifty was up 129.90 points, or 0.59 per cent, at 22,212.55 points.
Foreign institutional investors (FIIs) offloaded equities worth ₹3,405.82 crore on net basis on Tuesday, according to exchange data.
Meanwhile, US President Donald Trump criticised the high tariffs charged by India and other countries including China, calling it “very unfair” and announcing reciprocal tariffs will kick in from next month.
The president made his case for his reciprocal tariffs, which will commence April 2.
In February, President Trump said that his administration will “soon” impose reciprocal tariffs on countries such as India and China, reiterating what he had said during Prime Minister Narendra Modi’s visit to the US capital last month.
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