The rupee opened 20 paise higher at 94.20 against the US dollar in early trade on Friday, driven by optimism that trade negotiations between India and the United States are set to gain momentum. Forex traders said the rupee opened on a positive note with supportive oil prices and improving foreign inflows.
The overall bias remains positive for the rupee, they added.
Prime Minister Narendra Modi and US President Donald Trump on Thursday confirmed that a trade deal was a major part of their negotiations during their meeting in France.
At the interbank foreign exchange market, the rupee opened at 94.30 and quickly gained strength to touch 94.20, registering a gain of 20 paise from its previous close.
On Tuesday, the rupee had settled 10 paise higher at 94.40 against the US dollar.
“The Reserve Bank of India is also expected to use incoming dollar flows to rebuild forex reserves and steadily reduce its large forward dollar book, estimated at around USD 110 billion,” traders said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 100.92, up 0.08 per cent.
Brent Crude, the global oil benchmark, was trading 0.85 per cent lower at $79.17 per barrel in futures trade.
On the domestic equity market front, the Sensex tumbled 786.58 points to 76,624.90 in early trade, while the Nifty declined 210.95 points to 23,959.80.
Foreign institutional investors offloaded equities worth Rs 1,025.20 crore on a net basis on Thursday, according to exchange data.
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