The rupee traded in a tight range and appreciated by 6 paise to 88.67 against the US dollar in early trade on Tuesday, as weakness of the US dollar amid concerns over the long-term health of the US economy supported the domestic unit at lower levels.
Forex traders said a muted trend in domestic equities and foreign fund outflows weighed on investor sentiment.
At the interbank foreign exchange market, the rupee opened at 88.79 against the US dollar, then touched 88.67, registering a gain of 6 paise from its previous close.
The rupee was later trading at 88.71 against the greenback
On Monday, the rupee had settled at 88.73 against the greenback.
Forex traders said positive global cues amid progress on the US shutdown bill and optimism over a nearing US trade deal supported the local unit.
US President Donald Trump supported the bipartisan deal that will end the US government shutdown within days. Trump said that he will reduce tariffs on India at some point, with India having reduced its purchases of Russian crude, IFA Global said in a research note.
The US is "pretty close" to reaching a "fair trade deal" with India, Trump has said, adding that he will lower the tariffs imposed on New Delhi "at some point."
"We're making a deal with India, a much different deal than we had in the past. So right now, they don't love me, but they'll love us again," Trump said on Monday.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent higher at 99.65.
Brent crude, the global oil benchmark, was trading 0.14 per cent lower at USD 63.97 per barrel in futures trading.
On the domestic equity market front, Sensex declined 175.32 points to 83,360.03 in early trade, while the Nifty dropped 51.60 points to 25,522.75.
Foreign Institutional Investors offloaded equities worth Rs 4,114.85 crore on Monday, according to exchange data.
Source Name : Economic Times