Rupee strengthens 8 paise to 84.78 against the US dollar in early trade

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The Indian rupee regained some ground in early trade on Tuesday, rising by 8 paise to 84.78 against the US dollar. This recovery follows a period of sustained decline and is primarily attributed to fresh foreign fund inflows and a positive sentiment in domestic equities. The rupee had previously hit an all-time low on Monday, marking its steepest fall in over a month.

At the interbank foreign exchange, the rupee opened at 84.80 and traded within a narrow range, briefly touching 84.78, before settling at 84.82 against the greenback. On Monday, the rupee had plunged 20 paise to close at a record low of 84.86 against the dollar.

Forex traders noted that the recent change in leadership at the Reserve Bank of India (RBI) added an element of uncertainty to the currency market. The government appointed Revenue Secretary Sanjay Malhotra as the new RBI Governor, a move that has garnered mixed reactions. Analysts highlighted that Malhotra's approach, which focuses on prioritising economic stability over revenue concerns, may bring shifts in monetary policies. CR Forex Advisors' Managing Director, Amit Pabari, commented on the potential impact, emphasising the uncertain outlook in light of Shaktikanta Das's departure, as his tenure was instrumental in safeguarding the rupee from significant declines.

The dollar index, which measures the strength of the US dollar against a basket of six major currencies, was stable at 106.15, remaining unchanged from its previous close. In global markets, Brent crude oil prices slipped by 0.36 per cent, trading at USD 71.88 per barrel in futures.

The rupee's volatility is expected to continue as the market awaits clarity on the policies of the newly appointed RBI Governor. Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, indicated that the weakness of the rupee is likely to persist unless the new governor takes significant steps to address it.

In the domestic equity markets, the 30-share benchmark Sensex was up by 83.08 points, or 0.10 per cent, trading at 81,591.54, while the Nifty rose by 23.35 points, or 0.09 per cent, to 24,642.35 points. Foreign Institutional Investors (FIIs) continued to be net buyers, purchasing shares worth Rs 724.27 crore on Monday, as per exchange data.

PTI reports suggest that the market's trajectory may depend on the upcoming actions of the RBI's new leadership as well as external global factors, including fluctuations in crude oil prices and global inflation trends.

(With inputs from PTI)