Rupee rises 74 paise to 84.62 against US dollar in early trade

In early trade on Tuesday, the rupee appreciated 74 paise to 84.62 against the US dollar, supported by optimism following the easing of tensions between India and Pakistan and the US-China trade agreement.

Forex traders said continued foreign investor interest in Indian assets provided fundamental support to the local unit.

On Saturday, India and Pakistan announced an agreement to cease all military actions — on land, air, and sea — with immediate effect.

At the interbank foreign exchange market, the domestic currency opened at 84.70, touched an early low of 84.74, and rose to a high of 84.62 against the greenback, registering a gain of 74 paise over its previous close.

On Friday, the rupee had pared initial losses to settle 22 paise higher at 85.36 against the US dollar. The forex market was closed on Monday on account of Buddha Purnima.

In his first address to the nation after Operation Sindoor, Prime Minister Narendra Modi on Monday issued a strong warning to Pakistan, stating that India would not succumb to nuclear blackmail and reiterating that "terror and trade, terror and talks cannot go together."

“Operation Sindoor is India’s new policy against terrorism and our unwavering pledge for justice. It is the new normal. We have only kept in abeyance our operations against Pakistan, and the future will depend on their behaviour,” Modi said.

Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading 0.20% lower at 101.58. The index had gained over 1.30% on Monday, buoyed by the US-China trade agreement under which both countries significantly reduced tariffs.

With the recently signed US-UK trade deal as well, traders are now pricing in only two rate cuts this year, pushing bond yields higher and supporting the dollar index.

“US tariffs on Chinese goods dropped from 145% to 30%, and China’s tariffs on US goods fell from 125% to 10%. This lifted optimism around the US economy as trade war tensions cooled,” said Amit Pabari, Managing Director at CR Forex Advisors.

Brent crude, the global oil benchmark, fell 0.22% to USD 64.82 per barrel in futures trade. However, prices have surged in recent sessions to near USD 65 per barrel, which could widen India’s trade deficit, Pabari noted.

“From a technical perspective, the USDINR pair remains in a downtrend, and every uptick is likely to present a selling opportunity. For now, the pair is expected to trade within a range of 84.50–85.10,” he added.

In the domestic equity market, the 30-share BSE Sensex declined 902.68 points, or 1.10%, to 81,527.22, while the NSE Nifty fell 207.15 points, or 0.83%, to 24,717.55.

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