The rupee appreciated by 19 paise to close at 87.00 (provisional) against the US dollar on Wednesday on sharp pullback in domestic equities, a weak American currency and a decline in crude oil prices.
Forex traders said US President Donald Trump's tariff escalation has set off a chain reaction in global markets, sending the dollar into a downward spiral.
At the interbank foreign exchange, the rupee witnessed high volatility. It opened at 87.18 then touched the intraday high of 86.93 and the low of 87.20 against the greenback. The unit ended the session at 87.00 (provisional) against the dollar, registering a gain of 19 paise from its previous closing level.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.79 per cent lower at 104.91 amid trade tariff uncertainties.
Brent crude, the global oil benchmark, fell 0.75 per cent to USD 70.51 per barrel in futures trade.
"We expect the rupee to trade with a slight positive bias on weakness in the US dollar and a decline in crude oil prices. Any extended recovery in the domestic markets may also support the rupee," said Anuj Choudhary - Research Analyst at Mirae Asset Sharekhan.
However, FII outflows may cap sharp gains. Uncertainty over the trade tariff issue may further pressurise the rupee.
"Traders may take cues from ISM services PMI and ADP non-farm employment data from the US. USD-INR spot price is expected to trade in a range of Rs 86.75 to Rs 87.20," Choudhary added.
In the domestic equity market, the 30-share BSE Sensex surged 740.30 points, or 1.01 per cent, to settle at 73,730.23, while the Nifty advanced 254.65 points, or 1.15 per cent, to close at 22,337.30 points.
Foreign institutional investors (FIIs) offloaded equities worth Rs 3,405.82 crore on net basis on Tuesday, according to exchange data.
On the domestic macroeconomic front, India's services sector activity witnessed a sharp uptick in February boosted by improving domestic and international demand, which resulted in a quicker expansion in output and a substantial increase in employment, a monthly survey said on Wednesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose from January's 26-month low of 56.5 to 59.0 in February, indicating a sharp pace of expansion.
Meanwhile, US President Donald Trump criticised the high tariffs charged by India and other countries, terming them as "very unfair" and announced reciprocal tariffs from April 2 on nations that impose levies on American goods.
Trump made these remarks in an address to the Joint Session of the Congress on Tuesday.
Trump is implementing a 25 per cent additional tariff on imports from Canada and Mexico and a 10 per cent additional tariff on imports from China. In a retaliatory action, Canada said that effective March 4, 2025, it is imposing 25 per cent tariffs on USD 30 billion in goods imported from the United States.
Mexico said it will announce reciprocal actions on Sunday.
China also announced it will impose additional tariffs of up to 15 per cent on imports of key US farm products.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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