The Indian rupee ended stronger against the greenback on Tuesday as the US dollar index fell to the lowest level in six months.
The local currency appreciated 12 paise to close at 87.21 against the dollar, according to Bloomberg data. It ended at 87.33 on Monday.
The Indian unit opened four paise lower at 87.37 as traders remained cautious on concerns over tariff outlook. Intraday, the rupee rose 0.19% to the day's high of 87.17 against the dollar.
The Reserve Bank of India likely sold the US unit in the foreign exchange market to arrest the decline in the domestic currency, Reuters reported.
The markets reacted to slowing US growth prospects amid President Donald Trump's trade policies. The Federal Reserve is expected to keep interest rates unchanged in its upcoming policy meeting, while markets remain divided on a rate cut in May amid concerns of escalation in recession risks, according to Ritesh Bhansali, director of Mecklai Financial Services Ltd.
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