Rupee Opens Stronger On Plunging Dollar Index, Exports Likely To Pick Up In 90-Day Tariff Pause

The rupee strengthened sharply against the US dollar on Tuesday, boosted by a plunge in the dollar index amid recessionary fears and geopolitical unease.

The Indian unit opened 20 paise higher at 85.85 to the dollar.

Financial markets in India were closed on Monday on account of Ambedkar Jayanti. The rupee settled at a low of 86.05 against the US dollar on Wednesday.

"The rupee is expected to open a tad stronger as we await clarifications on the exemptions given by Trump and when he would again apply these tariffs on electronics. We see more exports happening in the 90-day period Trump has given, so there could be more inflows, and the rupee could gravitate towards 85.25 in the coming days. For the day, 85.75 to 86.25 seems to be a safe range," said Anil Kumar Bhansali, head, treasury and executive director, Finrex Treasury Advisors LLP.

"Adding to the support, India's forex reserves stand tall at $676.27 billion with an 11-month import cover, offering the Reserve Bank of India ample room to manage volatility and defend the rupee if needed," said Amit Pabari, managing director of CR Forex Advisors.

The dollar index, though trading 0.10% up at 99.74 as of 09:06 a.m., has slipped 4.22% in the last five sessions. "The damage done to the dollar's status as a haven is so severe that the currency is likely to embark on a sustained decline," Markets Live strategist Garfield Reynolds told Bloomberg.

Oil prices have plummeted by roughly $10 this month as the escalating trade war between the US and China fuels fears of a global recession, threatening to significantly reduce energy demand from the world's top crude consumers.

This concern has prompted agencies to lower demand outlooks and analysts to cut price forecasts, with the potential for a supply glut further amplified by OPEC+'s unexpected decision to increase output more rapidly than anticipated.

The June future contract of Brent crude was trading 0.11% up at $64.95 a barrel as of 09:09 a.m.