The rupee on Tuesday opened 23 paise higher at 71.33 against the US dollar as oil prices dropped 1 per cent, amid reports of a big climb in US inventories and forecasts of record shale output stoked worries about oversupply.
The domestic unit on Monday recovered by 34 paise to close at 71.56 against the US dollar as forex market sentiments were driven by the country's narrowing trade deficit in November as also smart gains in domestic equities.
"Trade data on Friday showed the trade gap narrowed to $16.7 billion in November from October's $17.1 billion as a drop in oil prices helped. Foreign flows into Indian stocks and bonds have also improved this month, helping to boost the currency," said VK Sharma, Head PCG & Capital Markets Strategy at HDFC Securities.
On the global front, International Brent crude oil futures on Tuesday were at $58.95 per barrel at 07:11 am, down 66 cents, or 1.11 per cent, from their last close. US West Texas Intermediate (WTI) crude futures were down 40 cents, or 0.8 per cent, at $49.48 per barrel, Reuters reported.
Asian share markets slumped in early trade as heightened concerns about a slowing global economy sent Wall Street stocks skidding to their lowest levels in more than a year. MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.3 per cent in mid-morning trade while Japan’s Nikkei tumbled 1.2 per cent by the midday break. Chinese shares opened in negative territory with the blue-chip index down 0.3 per cent and Hong Kong’s Hang Seng index flat, while Australian shares fell 0.8 per cent, Reuters reported.