Rupee gains 10 paise to settle at ₹85.26 against US dollar

The rupee pared most of its initial gains and ended the day higher by 10 paise at ₹85.26 (provisional) against the American currency on Wednesday, supported by gains in domestic equities and positive macroeconomic data.

Forex traders said the weakness of the American currency in the overseas market and rising appetite for riskier assets amid easing trade tariff tensions boosted investors' sentiments.

At the interbank foreign exchange, the domestic unit opened on a positive note and moved between the intra-day high of ₹85.05 and the low of ₹85.52 against the greenback. The unit ended the session at ₹85.26 (provisional), registering a gain of 10 paise over its previous closing level.

On Tuesday, the rupee reversed early gains to settle flat at ₹85.36 against the US dollar.

"Bolstered by a weaker US dollar index, cheaper imported commodities, and a prevailing risk-on mood in the markets, the Indian rupee saw gains against the US dollar on Wednesday," said Dilip Parmar, Senior Research Analyst, HDFC Securities.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.64% lower at 100.35.

Brent crude, the global oil benchmark, fell 1.10% to USD 65.90 per barrel in futures trade.

The retreat in crude oil prices and the overall softening of the greenback acted as tailwinds, specifically supporting the local currency during Wednesday's trading session, Parmar said, adding that in the near future, the USDINR spot rate is anticipated to find a floor near the 84.90 mark, while encountering upward pressure around the 85.70 level.

In the domestic equity market, the 30-share BSE Sensex advanced 182.34 points, or 0.22%, to close at 81,330.56, while the Nifty rose 88.55 points, or 0.36%, to 24,666.90.

Foreign institutional investors (FIIs) offloaded equities worth ₹476.86 crore on a net basis on Tuesday, according to exchange data.

On the domestic macroeconomic front, India's retail inflation eased to a nearly six-year low of 3.16% in April, creating enough room for the Reserve Bank to go for another round of rate cut in the June monetary policy review.

Wholesale price inflation dropped to a 13-month low of 0.85% in April with softening in prices of food articles, fuel and manufactured products.