Mumbai, Feb 4 (PTI): The Indian rupee staged a modest recovery on Tuesday, gaining 3 paise to close at 87.08 (provisional) against the US dollar, bouncing back from its record low. The rebound came as the US dollar index retreated after President Donald Trump temporarily paused tariffs on Mexico and Canada for 30 days.
Despite opening at 86.98, the rupee experienced volatility during the session, hitting an intraday low of 87.13 before settling slightly higher. The rupee had plunged 49 paise on Monday, closing at an all-time low of 87.11 against the greenback.
Market Dynamics and Expert Views
Forex traders attributed the rupee’s limited recovery to the US dollar index, which had earlier surged past 109.88 but later declined to 108 following Trump’s tariff suspension.Analysts anticipate continued pressure on the rupee due to uncertainties over US trade policies. Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, remarked,
"The rupee is likely to trade with a negative bias due to uncertainty over US trade tariffs. Any escalation of the tariff war by China could weaken global risk sentiments, strengthening the dollar. However, possible intervention by the Reserve Bank of India (RBI) could provide some support to the rupee."
Focus on RBI’s Monetary Policy Decision
Investors remain cautious ahead of the Reserve Bank of India’s (RBI) monetary policy meeting, set to begin on February 5, with key policy decisions expected on February 7.Meanwhile, Finance Minister Nirmala Sitharaman reiterated that the rupee’s valuation is market-determined, dismissing concerns over devaluation. Finance Secretary Tuhin Kanta Pandey also assured that the RBI is actively managing currency volatility and there is no major concern over the rupee's decline.
Broader Market Movements
- Dollar Index: Trading 0.48% lower at 108.47
- Brent Crude: Fell 1.18% to USD 75.06 per barrel
- Stock Markets:
- Sensex surged 1,397.07 points (1.81%) to close at 78,583.81
- Nifty jumped 378.20 points (1.62%) to settle at 23,739.25
- Foreign Institutional Investors (FIIs): Offloaded equities worth ₹3,958.37 crore in Monday’s session.
India’s Manufacturing Growth Hits Six-Month High
Amid rupee fluctuations, India’s manufacturing sector showed strong performance, with the HSBC India Manufacturing Purchasing Managers' Index (PMI) surging to 57.7 in January—the highest in six months. This rise was driven by the fastest growth in new export orders since February 2011, signaling robust demand in the sector.As global markets react to shifting trade policies and RBI’s upcoming monetary decisions, investors remain watchful of further movements in the rupee and economic indicators.
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