The Indian rupee made a strong recovery in early trade on Tuesday, surging 82 paise to trade at 94.96 against the US dollar. Forex traders noted that the appreciation was primarily driven by a sharp contraction in dollar demand within the spot market. This easing of pressure came on the back of specific arrangements providing dollars through designated banks for oil-marketing companies, alongside regulatory steps increasing the transaction costs associated with foreign exchange hedging.

At the interbank foreign exchange market, the domestic unit opened lower at 95.53 per dollar. However, it quickly gained momentum and climbed to 94.96 against the greenback, marking an 82-paisa gain over its previous closing price. This follows a massive 93-paisa jump on Monday when the rupee settled at 95.78 per dollar—recording its biggest single-day surge in over six months.

On the global macroeconomic front, the dollar index—which measures the strength of the greenback against a basket of six major world currencies—was trading down by 0.15 percent at 102.43. Domestic equity markets mirrored the positive sentiment, with the 30-share BSE Sensex rising 305 points to open at 72,224.15, while the broader NSE Nifty advanced 93.40 points to touch 22,458.50. Concurrently, international crude oil benchmark Brent crude futures dropped 1.11 percent to $105.47 per barrel, offering additional relief to the import-dependent economy.

According to exchange data, foreign institutional investors (FIIs) offloaded equities worth a net 1,708.48 करोड़ rupees (1,708.48 crore rupees) on Monday. Despite sustained capital outflows by foreign investors, coordinated policy measures and favorable global commodity price trends continue to provide strong foundational support to the domestic foreign exchange and equity markets.