Representative image of Indian Rupee and US Dollar.
Credit: iStock Image.
Mumbai: The Indian rupee is expected to open marginally higher on Tuesday, building on the modest relief from the previous session, though sentiment remains fragile amid concerns over the fallout from higher U.S. tariffs.
The 1-month non-deliverable forward indicated the rupee will open in the 88.10 to 88.14 range versus the U.S. dollar, compared with 88.1950 on Monday.
The rupee dropped to a lifetime low of 88.33 on Monday before staging a slight recovery. Market chatter pointed to likely Reserve Bank of India dollar sales helping the recovery, though bankers said it was hard to pin down.
Currency traders said the rupee's trajectory will hinge on the RBI’s stance, with portfolio outflows and active importer hedging piling on pressure. Outflows and tariff-related uncertainty are expected to cap any upside, they added.
Directionally, risks for the rupee right now are firmly on the downside, a spot FX trader at a mid-sized private sector bank said.
"It will take either a sizeable dollar decline, aggressive RBI intervention or a positive surprise on the U.S.-India trade front to engineer a meaningful turnaround," he added.
Foreign investors were net sellers of Indian equities on Monday, preliminary data showed, though the pace of outflows tempered compared with the previous few sessions.
Meanwhile, data released late on Monday showed India's current account swung to a deficit in the April-June quarter on the back of a wider trade deficit.