The Indian rupee strengthened by 11 paise to 85.93 against the U.S. dollar in early trading on Tuesday, defying headwinds from rising global oil prices and a stronger dollar.
At the interbank foreign exchange, the rupee opened at 85.96 before firming to 85.93. It had settled at 86.04 on Monday.
Currency traders attributed the rupee’s resilience to suspected dollar selling by the Reserve Bank of India (RBI) near the 86.20 level, helping limit further depreciation.
“The RBI appears active around 86.20, which is helping cap rupee losses,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors. He cautioned that a breach of this level could trigger stop-loss buying from importers, possibly driving the dollar to 86.70.
Global cues weighed on sentiment. Brent crude prices jumped more than 1.5% to $74.40 per barrel amid worries of supply disruptions due to tensions between Israel and Iran. Meanwhile, the U.S. dollar index stood strong at 98.24.
U.S. equity futures slipped following reports that Washington may toughen its stance in the Middle East crisis. Analysts warned that renewed risk aversion could drive more investors toward the dollar.
Back in India, stock markets opened on a weak note. The Sensex dropped 127 points to 81,669, while the Nifty slipped 55 points to 24,891.
On the economic front, India’s unemployment rate rose to 5.6% in May from 5.1% in April, mostly due to seasonal factors. Trade data showed exports fell 2.17% year-on-year to $38.73 billion, while imports dipped 1.7% to $60.61 billion, narrowing the trade deficit to $21.88 billion.
Foreign institutional investors offloaded ₹2,539 crore worth of equities on Monday, according to exchange data. However, bond flows turned positive with net purchases of $31.7 million, NSDL data showed.
