The Indian rupee appreciated by 5 paise to 95.77 against the US dollar in early trade on Tuesday, buoyed by positive domestic equity market sentiment and foreign institutional investors' renewed interest in Indian stocks.
The local currency opened at 95.70 at the interbank foreign exchange before slipping slightly to 95.77, marking a gain from its previous close. This follows a 17 paise rise to 95.82 against the US dollar on Tuesday, after gaining 74 paise over the previous two sessions.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was down 0.12% at 101.14 ahead of the Federal Reserve's monetary policy announcements.
Brent crude futures, the global oil benchmark, were trading 4.27% higher at USD 87.68 per barrel, reflecting geopolitical tensions. Analysts noted that crude oil prices surged overnight as the US military reported that Iran launched multiple ballistic missiles at American forces, all of which were intercepted.
On the domestic front, the Sensex climbed 682.57 points, or 0.89%, to 77,448.49, while the Nifty rose 186.85 points, or 0.78%, to 24,172.20. Foreign Institutional Investors purchased equities worth Rs 755.33 crore on a net basis on Tuesday, according to exchange data.
Background
The rupee's performance is crucial as it reflects the broader economic sentiment and impacts import costs, inflation, and foreign investment flows.
Moving forward, market participants will closely monitor the Federal Reserve's policy announcements and geopolitical developments, which could influence currency and commodity markets.
