Rupee jumps 74 paise to ₹84.62 against US dollar in early trade

The rupee appreciated 74 paise to ₹84.62 against the US dollar in early trade on Tuesday, supported by optimism from easing of tensions between India and Pakistan as well as the US-China trade deal.

Forex traders said continued foreign investor interest in Indian assets lent fundamental support to the local unit.

India and Pakistan on last Saturday announced reaching an understanding to stop all firings and military actions on land, air and sea, with immediate effect.

At the interbank foreign exchange, the domestic unit opened at ₹84.70 and fell to an early low of ₹84.74 and a high of ₹84.62 against the greenback, registering a gain of 74 paise over its previous close.

On Friday, the rupee pared its initial losses and settled for the day higher by 22 paise at ₹85.36 against the US dollar.

The foreign exchange market was closed on Monday on account of Buddha Purnima.

In his first address to the nation after Operation Sindoor, Prime Minister Narendra Modi on Monday sternly warned Pakistan that India will not succumb to nuclear blackmail and sent a clear message to the world: terror and trade, terror and talks cannot go together.

"Operation Sindoor is India's new policy against terrorism and our unwavering pledge for justice. It is the new normal. We have only kept in abeyance our operations against Pakistan, and the future will depend on their behaviour," Modi said.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 20% at 101.58.

The dollar index rose over 1.30% on Monday, driven by the US-China trade agreement, where both sides significantly reduced tariffs.

Combined with the already signed US-UK trade deal, traders are now pricing in only two rate cuts this year, pushing bond yields higher, which supported the dollar Index. In the domestic equity market, the 30-share BSE Sensex declined 902.68 points, or 1.10%, to 81,527.22, while the Nifty fell 207.15 points, or 0.83%, to 24,717.55.

Foreign institutional investors (FIIs) bought equities worth ₹1,246.48 crore on a net basis on Monday, according to exchange data.