Mumbai, Feb 4: The rupee recovered 3 paise from its all-time low level to close at 87.08 (provisional) against US dollar on Tuesday, as the American currency index retreated from its elevated level after President Donald Trump agreed to pause tariffs on Mexico and Canada.
Forex traders said the US dollar index, which had surged past 109.88 level, retreated to 108 level after Trump announced the temporary pause on tariffs for 30 days.
At the interbank foreign exchange, the rupee opened at 86.98 and touched an intraday low of 87.13 against the American currency during the session.
The local unit finally settled at 87.08 (provisional), higher by 3 paise over its previous close.
On Monday, the rupee plunged 49 paise to close at an all-time low of 87.11 against the US dollar.
“We expect the rupee to trade with negative bias over uncertainty over US trade tariffs. Escalation of the tariff war by China may dent global risk sentiments wherein the US dollar may strengthen and investors would look out for safe haven. However, any central bank intervention may support the rupee,” Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan, said.
Investors may remain cautious ahead of the Reserve Bank of India’s monetary policy meeting this week, Choudhary added.
The monetary policy committee (MPC) of the Reserve bank of India (RBI) will begin its three-day meeting on February 5. The MPC will announce its policy decisions on February 7.
Trump on Monday held off on his tariff threats against Mexico and Canada for 30 days after they pledged to boost border enforcement.
Meanwhile, Finance Minister Nirmala Sitharaman on Monday said the value of Indian rupee is market-determined, and there has been no devaluation, which is a feature of a fixed exchange rate regime.
The rupee has been falling in recent weeks, and on Monday touched an all-time intraday low of 87.29 against the American currency.
Finance Secretary Tuhin Kanta Pandey on Monday said there is no concern over the rupee value and the Reserve Bank of India is managing the volatility of the local currency.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.48 per cent lower at 108.47.
Brent crude, the global oil benchmark, fell 1.18 per cent to USD 75.06 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex closed 1,397.07 points, or 1.81 per cent, higher at 78,583.81 points, while the Nifty settled up 378.20 points, or 1.62 per cent, at 23,739.25 points.
Foreign institutional investors (FIIs) offloaded equities worth Rs 3,958.37 crore in the capital markets on a net basis on Monday, according to exchange data.
On the domestic macroeconomic front, India’s manufacturing sector growth started the year 2025 on a strong footing and touched a six-month high in January, fuelled by the steepest upturn in exports in nearly 14 years, a monthly survey said on Monday.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose from December’s one-year low of 56.4 to 57.7 in January supported by the fastest upturn in new export orders since February 2011. (PTI)
