Rupee appreciates 4 paise to 83.57 against US dollar in early trade

The rupee appreciated 4 paise to 83.57 against the US dollar in early trade on Tuesday, supported by positive trend in domestic equities and foreign fund inflows.

Forex traders said dollar demand from local importers limited the rupee's upward momentum.

At the interbank foreign exchange market, the rupee opened at 83.59 and gained ground to trade at 83.57 against the greenback in initial deals, registering a rise of 4 paise from its previous closing level.

On Monday, the rupee depreciated 10 paise to 83.61 against the US dollar.

"The Indian rupee is currently caught in a tug-of-war between negative and positive forces, trading within a tight range," CR Forex Advisors MD Amit Pabari said, adding that continuous intervention by the Reserve Bank of India has helped prevent significant depreciation.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 104.33, higher by 0.14 per cent, driven by stronger-than-expected US Producer Price Index data.

"Furthermore, an assassination attempt on former US President Donald Trump over the weekend increased his re-election odds, historically associated with higher long-dated Treasury yields and a stronger dollar, thereby creating additional pressure on the rupee," Pabari added.

Brent crude futures, the global oil benchmark, declined 0.27 per cent to $84.62 per barrel.

In the domestic equity market, the BSE Sensex was trading 152.42 points, or 0.19 per cent higher at 80,817.28 points. The broader NSE Nifty advanced 46.40 points, or 0.19 per cent, to 24,633.10 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Monday, as they purchased shares worth Rs 2,684.78 crore, according to exchange data.

Meanwhile, India's merchandise exports in June increased 2.56 per cent to $35.2 billion despite global challenges, even as the trade deficit widened to $20.98 billion during the month.

On the price front, wholesale inflation in the country surged to a 16-month high of 3.36 per cent in June on account of a rise in prices of food articles, especially vegetables and manufactured items.