3 Sep 2025 (Punjab Khabarnama Bureau): The Indian rupee recovered by 15 paise to open at ₹88.00 per U.S. dollar in early trade on Wednesday, buoyed by strong domestic equity markets and steady foreign fund inflows.
Market Factors Supporting the Rupee
Forex traders attributed the rupee’s recovery to a positive risk-on sentiment in Asian markets and the easing of U.S. Treasury yields overnight. A dip in the dollar index also supported the local currency. The dollar index, which measures the greenback against a basket of six major currencies, slipped below 104.50, giving emerging market currencies breathing space.
Equities Add Momentum
Indian equity benchmarks opened higher, led by buying in banking, IT, and auto stocks. The BSE Sensex and NSE Nifty gained over 0.5% in early trading, encouraging foreign investors to pump capital into Indian assets — a key factor boosting the rupee.
Crude Oil and Inflation Outlook
Another contributing factor was the decline in crude oil prices, which had been a drag on the rupee in the previous week. Brent crude slipped below $80 per barrel, easing concerns about India’s import bill and improving trade deficit expectations. This reduced pressure on the currency and provided further support for the recovery.
Previous Day’s Performance
On Tuesday, the rupee had closed at ₹88.15 per dollar, weighed by strong month-end dollar demand from importers and weakness in Asian currencies. However, today’s session saw early buying interest from exporters and speculative traders, leading to the currency’s appreciation.
Global Context
Globally, investors are awaiting key economic data from the United States, including GDP growth numbers and comments from Federal Reserve officials that could signal the future interest rate path. Any dovish signal from the Fed could provide additional tailwinds to the rupee in the near term.
Outlook
Analysts expect the rupee to trade in the 87.90–88.30 range in the short term, with further appreciation possible if foreign portfolio inflows continue and global crude prices remain subdued. However, traders remain cautious as volatility could return ahead of U.S. non-farm payroll data due later this week.
Summary
The rupee gained 15 paise to 88 per U.S. dollar in early trade, supported by strong equities, lower crude prices, and foreign inflows, though volatility may persist ahead of key U.S. data.