The Indian rupee registered solid gains against the US dollar on Tuesday, propelled by growing optimism surrounding a potential trade agreement between the United States and India and receding fears about the prolonged US government shutdown.
Rupee's Strong Performance in Forex Market
According to PTI reports, the domestic currency appreciated by 23 paise to conclude the trading session at 88.50 against the American currency. The trading day began on a positive note, with the rupee opening at 88.69 at the interbank foreign exchange marketplace. Throughout the day, it oscillated between an intraday peak of 88.50 and a low of 88.72 before settling at its closing figure.
Analysts Pinpoint Key Drivers for the Rally
Market experts identified several factors contributing to the rupee's upward trajectory. Anuj Choudhary, a Research Analyst at Mirae Asset ShareKhan, stated that the currency gained strength due to an improvement in global risk appetite and anticipations that the US government shutdown would soon conclude.
Adding a significant political dimension, Dilip Parmar, Research Analyst at HDFC Securities, highlighted that comments from US President Donald Trump acted as a primary catalyst. President Trump had remarked that Washington and New Delhi were "pretty close" to finalizing a trade accord. Parmar expressed confidence that the successful completion of this trade deal would serve as a powerful positive trigger for the Indian rupee. He also noted critical technical levels for the USD-INR pair, identifying 88.40 as a key support level and 88.75 as a resistance point.
Broader Market Context and Domestic Equities
The positive sentiment extended beyond the currency market. On the global front, the dollar index, which measures the greenback's strength against a basket of major currencies, saw a marginal increase of 0.03% to 99.61. Meanwhile, Brent crude futures, a major global oil benchmark, rose by 0.34% to $64.28 per barrel.
Domestic equity markets mirrored the upbeat mood, staging an impressive rally. The benchmark Sensex surged by 335.97 points to finish at 83,871.32. Similarly, the Nifty climbed 120.60 points, settling at 25,694.95. However, providing a counterpoint to the bullish trend, exchange data revealed that Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth Rs 803.22 crore during the session.
