Rupee's appreciation for 74 Paise to 84.62 in early trade on Tuesday was encouraged by ease of geopolitical tensions and optimism in the U.S.-China tariff truce.
Forex dealers have regained confidence in Indian assets after accruing the rally to positive developments on the regional and global fronts. “The cross-border tensions between India and Pakistan and the most recent U.S.-China trade agreement has improved market sentiment,” one dealer noted.
On Saturday, India and Pakistan agreed to immediately stop all hostilities on land, air and ocean borders, a move that the market welcomed. Trade talks between Washington and Beijing were the two countries agreed to suspend mutual tariffs for 90 days, greatly reducing trade-related uncertainty, both countries reached trade dialogue.
On the interbank forex exchange, the rupee opens at 84.70, moving between the high of 84.62 and the lowest level of 84.74, strengthening 74 Paise from the previous closing. On Friday, the match against the Greenguard ended with 22 Paces with a score of 85.36. On Monday, the forex market still closed Buddha.
PM Modi's harsh warning to Pakistan
After Operation Sindor, Prime Minister Narendra Modi warned Pakistan in his first country speech that India would not tolerate nuclear blackmail, while reaffirming India's tough stance on terrorism.
“Operation Sindor is India's new policy on terrorism and our unwavering judicial assurance. This is the new regular scope. We only retain actions against Pakistan and the future will depend on their actions.”
He added: “India will not succumb to nuclear blackmail and send a clear message to the world: terror and trade, terror and negotiation cannot be integrated.”
Please read also:“India will answer, nuclear blackmail will not work”: Prime Minister Modi's strong message to Parker | Key highlights of historic speech
US dollar index retreats; tariffs cut
The U.S. currency, measured in six major currencies as a basket, fell 0.20% to 101.58 in early Asian trading. It climbed 1.30% on Monday after news of a U.S.-China trade breakthrough.
“U.S. tariffs on Chinese goods have dropped from 145% to 30%, and Chinese tariffs on American goods have dropped from 125% to 10%. This optimism about the U.S. economy is cooling down as trade war tensions cool.”
He added that recent Brent crude oil earnings, currently hovering around $65 a barrel, could put pressure on India's trade balance. However, he pointed to the bearish technical outlook for the USD-INR pair.
“From a technical point of view, the USDINR pair is still on a downward trend and each upward may bring sales opportunities. Currently, the pair is expected to trade in the 84.50-85.10 range,” he said.
Please read also: First trade: Index opens, big losses; Nifty stays at 24,900, Paytm drops by more than 3%
Stellar market opening slightly lower after Monday
The Indian stock benchmark opened slightly lower on Tuesday after it released its best single-day earnings in four years in the previous session. BSE Sensex fell 69.34 points, or 0.08% at 82,360.56, while Nifty 50 fell 6.95 points, or 0.03%, to 24,917.75.
A wider market mixes together. Small-cap index accounts for 0.06%, while mid-card trading is weaker.
Meanwhile, foreign institutional investors remain bullish, net purchases of Rs 124.648 crore worth of Indian shares, exchange data showed.
(Input with PTI)
