The Indian rupee appreciated by 28 paise at market close on Tuesday as the greenback remained little changed amid lower oil prices and recessionary fears.
The local unit closed at 85.77 against the US dollar. It had slipped below the psychological level of 86 after three consecutive sessions. The rupee had opened at 85.85.
"Market focus has been on ever-shifting tariff headlines, with the US removing smartphones and other electronics from its duties on China over the weekend, providing some relief, although the comments from Trump suggested the reprice is going to be short-lived," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
Due to recent economic data pointing to waning signs, India’s industrial production growth slowed to 2.9% in February—the weakest in six months—falling short of the 4% market estimate, as it signals a loss in domestic economic momentum, according to Amit Pabari, managing director at CR Forex Advisors.
Given these factors, the rupee is expected to face a strong resistance at 86.40-86.50 levels and is likely to move towards 85.50 levels, he added.
The dollar moderately stabilised after a five-day slide, while oil prices saw volatility as traders closely monitored developments in the ongoing trade dispute and the potential for increased Iranian crude supply.
Earlier in the week, the US currency had faced downward pressure against major counterparts, fuelled by concerns that President Trump's tariffs could trigger inflation and a recession in the US economy.
The June futures contract for Brent crude was trading 0.49% down at $64.56 per barrel on the Intercontinental Exchange as of 3:50 p.m. Lower crude prices bode well for the rupee, as India is a large importer.
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