Rupee rises 26 paise to 94.96 against US dollar in early trade amid domestic growth

The Indian rupee advanced 26 paise to trade at 94.96 per US dollar on Tuesday morning. Market participants attributed the upward movement to robust domestic growth, contained fiscal slippage, and portfolio-related inflows.

At the interbank foreign exchange market, the local currency opened at 95.06 before gaining ground to touch 94.96 against the greenback. This registers a gain of 26 paise from its previous close. On Monday, the rupee had pared initial losses to settle 21 paise higher at 95.22 against the US dollar.

Forex traders noted that the USD/INR pair appears to have found a strong near-term base around the 95.10-95.20 range, with temporary support coming from MSCI-related inflows. Meanwhile, the dollar index, which measures the US currency against a basket of six major currencies, traded 0.03 percent higher at 99.46.

Global crude oil prices experienced upward pressure during the session. Brent crude futures traded 0.63 percent higher at USD 91.06 per barrel. The increase followed a warning from US President Donald Trump that the United States would hit Iran hard after missile attacks on American military bases in Jordan.

On the domestic equities front, the Sensex declined 121.48 points to 76,835.79 in early trade, while the Nifty dipped 52.6 points to settle at 24,027.80. Exchange data showed that foreign institutional investors (FIIs) offloaded equities worth ₹7,985.88 crore on a net basis on Monday.

Foreign portfolio investors (FPIs) had invested around $3.1 billion in August, marking their strongest monthly inflow in 23 months and their second consecutive month of net buying. However, foreign investors remain net sellers of approximately $24.6 billion overall for the year 2026, keeping the broader foreign-flow picture cautious.

On the macroeconomic front, India's economy grew at a faster-than-expected 7.8 percent in the April-June quarter. This performance demonstrated resilience against concerns that the conflict involving Iran and resulting global economic uncertainty could weigh on growth.

Amit Pabari, Managing Director at CR Forex Advisors, noted that the data is particularly noteworthy given that it occurred during a period marked by West Asia tensions and elevated crude prices. While strong growth does not automatically strengthen a currency, it reinforces the perception that India's domestic economy remains resilient despite global turbulence.

Additionally, data released by the Controller General of Accounts (CGA) on Monday showed that the Central Government's fiscal deficit for 2026-27 stood at 26.8 percent of the full-year target at the end of July. For the same four-month period in the previous financial year, the deficit stood at 29.9 percent of the Budget Estimates for 2025-26.

"The recent appreciation of the rupee, supported by strong quarterly GDP growth and portfolio inflows, demonstrates the underlying resilience of the Indian economy amidst global geopolitical uncertainties and fluctuating crude prices. For startups and businesses operating in India, macroeconomic stability and controlled fiscal deficits are critical indicators of a robust domestic market. While foreign capital flows remain mixed, sustained domestic growth provides a stable foundation for long-term entrepreneurial planning and investment." — Dr. Shishir Gupta, Founder & CEO, StartupLanes