Rupee rises 17 paise to ₹86.24 against US dollar in early trade

The rupee appreciated 17 paise to ₹86.24 against the US dollar in early trade on Thursday, tracking the weakness of the American currency in the overseas market.

Forex traders said uncertainty over the India-US trade deal has been a huge overhang for the forex market, leaving the rupee trading in a tight range.

Moreover, a negative trend in domestic equities and foreign fund outflows dented investors' sentiments and restricted the upmove of the local unit.

At the interbank foreign exchange, the domestic unit opened at ₹86.33 and touched ₹86.24 against the greenback in initial deals, higher by 17 paise from its previous closing level.

On Wednesday, the rupee settled with a loss of 3 paise at ₹86.41 against the dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.06% to 97.15, as investors watched out for a trade deal ahead of the August 1 deadline.

Brent crude, the global oil benchmark, went up by 0.25% to USD 68.68 per barrel in futures trade, on the trade optimism with US-Japan deal done and US-EU deal under talks, which could ease pressure on the global economy.

Bhansali further noted that despite a fall in Dollar index and rise in risk assets, Indian rupee has not been able to show any substantial gains largely due to significant dollar demand in the system.

If the discussions fail or get delayed, Indian exporters could face fresh pressure -- adding to the rupee’s challenges. However, if a deal is reached, it could offer a much-needed breather. Until then, the uncertainty is likely to keep market participants cautious.

Meanwhile, in the domestic equity market, Sensex declined 124.79 points or 0.15% to 82,601.85, while Nifty fell 15.75 points or 0.06% to 25,204.15.

Foreign institutional investors (FIIs) offloaded equities worth ₹4,209.11 crore on a net basis on Wednesday, according to exchange data.