After a streak of continuous decline, the Indian Rupee showed signs of recovery on Tuesday, thanks to positive cues from domestic equity markets and a slight dip in global oil prices. The rupee appreciated by 5 paise in early trade to reach ₹86.26 per US dollar, halting its recent downtrend that was driven largely by the strengthening of the US dollar in global markets.

Dollar Strength Limits Forex Movements

According to forex traders, uncertainty surrounding global tariffs continues to weigh heavily on currency markets, leading to restricted trading volumes and narrow fluctuations. The US dollar index, which measures the greenback against a basket of six major currencies, edged up 0.03% to 97.88, reflecting its firm global standing.

On Monday, the Indian rupee had fallen by 15 paise, closing at ₹86.31 against the US dollar. However, in early Tuesday trade, it rebounded slightly, touching an intra-day high of ₹86.29.

All Eyes on August 1 Tariff Deadline

Investor sentiment remains cautious as the market closely watches the August 1 deadline set by the US administration for key tariff decisions. Any shift in US trade policy, especially under former President Donald Trump’s renewed influence, could impact global trade dynamics.

RBI Intervenes to Support Rupee

Anil Kumar Bhansali, Head of Treasury at Finrex Advisors LLP, highlighted that despite ongoing dollar strength, the Reserve Bank of India (RBI) is actively selling dollars to cushion the rupee from further depreciation. He also noted that falling Brent crude prices in Asia—largely due to rising tensions in US-Europe trade relations—are helping limit India’s import bill, thereby supporting the rupee.

Bhansali warned that any hiccup in global trade negotiations could have a direct impact on economic activity and crude oil demand, both of which influence currency markets.

Exporters Anxious Over India-US Deal

Forex dealers say the market’s focus is now firmly on the anticipated India-US trade agreement, which could determine tariff structures moving forward. As August 1 draws near, Indian exporters are growing increasingly concerned about potential new tariffs and their implications on outbound trade.

In summary, while the rupee has shown marginal improvement, the broader outlook remains uncertain amid global trade tensions, a strong US dollar, and looming policy decisions. The upcoming days — especially the first week of August — could prove pivotal for currency and trade markets alike.