Mumbai: The Indian rupee bounced back on Tuesday, rising by 21 paise to 86.49 against the US dollar in early trading. This recovery followed its all-time low of 86.70 on Monday, thanks to a weakening US dollar and falling crude oil prices.
Forex traders noted that the rupee also gained support from lower inflation and a slight rebound in domestic stock markets, despite continued foreign fund outflows.
The rupee opened at 86.57 at the interbank forex market and quickly improved to 86.49, marking a positive shift from its previous close.
On Monday, the rupee had seen its biggest one-day drop in nearly two years, falling by 66 paise to 86.70. This was the steepest drop since February 6, 2023, when it lost 68 paise in a single session.
Over the past two weeks, the rupee has fallen by more than Re 1, slipping from 85.52 on December 30 to its recent low. It crossed the 85-per-dollar mark for the first time on December 19, 2024.
Meanwhile, the US dollar index, which measures the dollar’s strength against other major currencies, dropped 0.37% to 109.41. Brent crude prices also eased, trading 0.28% lower at $80.78 per barrel.
On the domestic front, the stock market showed signs of recovery. The Sensex rose by 364.90 points to 76,694.91, while the Nifty climbed 123.65 points to 23,209.60.
Foreign Institutional Investors (FIIs), however, sold equities worth Rs4,892.84 crore on Monday.
Government data released the same day showed retail inflation had fallen to a four-month low of 5.22% in December, primarily due to lower food prices.
This decline could give the Reserve Bank of India room to cut interest rates in its upcoming policy reviews. Inflation has now dropped for two consecutive months after exceeding the RBI’s 6% limit in October.
