Indian rupee, the local currency, rebounded from the five-month low and appreciated by 26 paise to 70.47 against the US dollar in early trade Tuesday amid positive opening in the domestic equity market.
Earlier at the interbank foreign exchange, the Indian rupee opened weaker than yesterday's close at 70.80 per US dollar, but gained momentum and touched a high of 70.47, registering a rise of 26 paise over its previous close.
Later, the local currency pared some gains and was trading at 70.60 against the dollar. Yesterday, Rupee had closed at 70.40 against the American currency.
Positive opening in the domestic equity market supported the domestic currency, although, foreign fund outflows and rising crude oil prices weighed on the domestic unit.
On a net basis, foreign portfolio investors (FPIs) sold shares worth a net of Rs 2016 crore on Monday, and domestic institutional investors (DIIs) were net sellers to the tune of Rs 1871 crore, provisional data available with BSE showed.
The domestic currency is expected to trade in a narrow range ahead of the outcome of RBI's monetary policy review meet scheduled to be released on Wednesday.
"Near term focus will be on the RBI's monetary policy meeting scheduled to announce outcome on 7th August. Market has already priced in 25 bps cut in interest rate amid lower core CPI and persistent economic slowdown," said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.
On the equity market front, bourses opened on a bullish note on Tuesday with benchmark indices BSE Sensex rebounding over 200 points and the NSE Nifty reclaiming the 10,900 level in early trade on Tuesday led by gains in Banking and Auto stocks. Additionally, Mid cap and Small-cap indices were trading higher too.
In the previous session on Monday, market saw an intense volatility throughout the session due to multiple headwinds like escalation in US-China trade war, weak corporate earnings, rupee downfall and political tensions in Jammu and Kashmir.
Elsewhere in Asian, Shanghai Composite Index, Hang Seng, Nikkei and Kospi were trading significantly lower in their respective early sessions. Bourses on Wall Street too ended in the red on Monday.
The global oil benchmark, Brent crude futures rose 0.99% to 60.40 per barrel.
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