Currency Market News: Rupee gains 3 paise, ends at 85.33 vs dollar

Rupee pared most of its initial gains to end 3 paise higher at 85.33 (provisional) against the US dollar on Tuesday, supported by rising risk appetite amid easing trade tensions. However, gains were capped by the impact of rising crude oil prices, a strong US dollar, and profit booking in domestic equities, traders said.

At the interbank foreign exchange market, the rupee opened at 84.70 and fluctuated between an intra-day high of 84.62 and a low of 85.48 against the greenback. It ultimately closed the session at 85.33 (provisional), marking a gain of 3 paise from its previous close. On Friday, the rupee had registered a 22-paise gain, settling at 85.36 against the dollar. The forex market was closed on Monday due to Buddha Purnima.

US and Chinese officials announced on Monday that they had reached an agreement to roll back most recent tariffs and agreed to a 90-day truce to continue talks on resolving their trade disputes.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that the rupee could trade with a positive bias due to de-escalating geopolitical tensions between India and Pakistan, as well as rising risk appetite globally amid easing trade tensions between the US and China. India and Pakistan recently announced an understanding to halt all military actions on land, air, and sea immediately.

In his first address following Operation Sindoor, Prime Minister Narendra Modi firmly warned Pakistan, emphasising that India would not yield to nuclear blackmail and made it clear that "terror and trade, terror and talks cannot go together."

Choudhary further pointed out that a rise in global crude oil prices and a dip in domestic markets could weigh on the rupee, with foreign institutional investor (FII) outflows potentially exerting pressure. Traders will likely monitor US CPI inflation data for further cues. The USD/INR spot rate is expected to trade within a range of 85 to 86.

The dollar index, which measures the greenback's strength against a basket of six currencies, was down 0.20 per cent at 101.58.

Meanwhile, Brent crude, the global oil benchmark, rose 0.42 per cent to $65.23 per barrel. Over the past few sessions, Brent crude prices have surged close to $65 per barrel, which could widen India's trade deficit, according to experts.

Stock market summary

On the domestic equity front, Indian markets saw a sharp reversal on Tuesday after recording their biggest single-day gain in over four years. The BSE Sensex plummeted 1,282 points, or 1.55 per cent, to close at 81,148, while the Nifty50 fell 346 points, or 1.39 per cent, ending at 24,578. This profit-taking wiped out Rs 1.51 lakh crore in investor wealth, with the total market capitalization of BSE-listed companies dropping to Rs 431.05 lakh crore.

Foreign institutional investors (FIIs) had bought equities worth Rs 1,246.48 crore on a net basis on Monday, according to exchange data.

(With inputs from PTI)