The rupee strengthened by 19 paise to 87.03 against the US dollar in early trading on Thursday, boosted by positive macroeconomic data that also prompted a surge in domestic equity markets.
Forex analysts noted that ongoing tariff disputes worldwide continued to drive foreign capital outflows, but a weaker US currency index and lower crude oil prices provided support to the local currency.
Opening at 87.13 at the interbank foreign exchange, the rupee reached a high of 87.03 against the US dollar in early trading, marking a significant increase of 19 paise from its previous close.
On Wednesday, the rupee closed 1 paisa lower at 87.22 against the US dollar, after a 10 paise recovery on Tuesday following a 36 paise decline on Monday.
The dollar index, which measures the dollar against a basket of six major currencies, was down 0.01% at 103.57.
Brent crude, the global oil benchmark, traded slightly lower at $70.90 per barrel in futures trade.
Domestic stock markets were trading positively, with the BSE Sensex up 23.47 points or 0.03% at 74,053.23 and the Nifty gaining 16.95 points or 0.08% at 22,487.45.
Foreign institutional investors (FIIs) sold equities worth ₹1,627.61 crore on a net basis on Wednesday, as per exchange data.
Recent government data revealed that India’s Consumer Price Index (CPI)-based retail inflation dropped to a seven-month low of 3.61% in February due to lower prices of vegetables, eggs, and other protein-rich items, potentially paving the way for another interest rate cut by the RBI next month.
Additionally, the Index of Industrial Production (IIP), a measure of industrial performance, recorded 5% growth in January 2025, driven by a rebound in manufacturing activity.
On the global front, US President Donald Trump imposed increased tariffs on all steel and aluminum imports to 25%, escalating tensions with US allies who retaliated with their own tariffs on American products. Canada implemented reciprocal tariffs on steel products and raised taxes on various items, while the EU announced higher tariffs on American goods such as beef, bourbon, and motorcycles.
