The Indian rupee appreciated by 19 paise to 87.03 against the US dollar in early trade on Thursday, bolstered by favourable macroeconomic data that also spurred buying activity in the domestic equity markets.
Forex analysts noted that while escalating global tariff tensions continued to drive foreign capital outflows, a weaker US dollar index and lower crude oil prices contributed to the rupee’s strength.
At the interbank foreign exchange market, the rupee opened at 87.13 before rising to a high of 87.03 against the greenback, marking a notable gain from its previous close of 87.22.
On Wednesday, the domestic currency settled 1 paisa lower at 87.22 against the dollar, following a 10-paise recovery on Tuesday, which had offset the steep 36-paise loss recorded in the preceding session on Monday.
Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was trading marginally lower by 0.01 per cent at 103.57. Brent crude, the global benchmark for oil prices, was also trading 0.01 per cent lower at USD 70.90 per barrel in futures trade.
In the domestic equity market, indices remained in positive territory, with the 30-share BSE Sensex rising by 23.47 points, or 0.03 per cent, to 74,053.23.
The broader Nifty gained 16.95 points, or 0.08 per cent, to reach 22,487.45.
Also read: Rupee slides 30 paise to 87.25 against dollar in early trade
Data from the stock exchanges indicated that foreign institutional investors (FIIs) offloaded equities worth Rs 1,627.61 crore on a net basis on Wednesday.
Government data released on Wednesday showed that India’s Consumer Price Index (CPI)-based retail inflation eased to a seven-month low of 3.61 per cent in February, attributed to a decline in prices of vegetables, eggs, and other protein-rich items.
The data has raised speculation about a potential interest rate cut by the Reserve Bank of India in its forthcoming monetary policy review.
Another report by the National Statistics Office (NSO) indicated that the Index of Industrial Production (IIP), a key measure of industrial performance, grew by 5 per cent in January 2025, driven by a recovery in manufacturing activity.
On the international front, US President Donald Trump has escalated tensions with allies by imposing a 25 per cent tariff on all steel and aluminium imports, vowing to reclaim what he termed as wealth "stolen" by other nations.
In response, Canada has imposed retaliatory taxes on a range of American products, including textiles, water heaters, beef, and bourbon.
Additionally, Canada announced 25 per cent reciprocal tariffs on steel products and increased taxes on tools, computers, servers, display monitors, sports equipment, and cast-iron goods.
Meanwhile, the European Union has also declared its intention to impose higher tariffs on American goods such as beef, poultry, bourbon, motorcycles, peanut butter, and denim.
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