The rupee rose 4 paise to 83.62 versus the US dollar in early trade on Tuesday, ahead of the budget announcement. According to forex dealers, the local currency strengthened when crude oil prices and the US dollar fell from highs. Foreign money inflows also boosted the rupee.
On the interbank foreign exchange market, the local currency started at 83.64 and reached an early high of 83.62, up 4 paise from the previous close. On Monday, the rupee edged up 4 paise to 83.66 versus the US dollar.
Forex dealers said market participants will closely monitor the Union Budget for more clues on the budget deficit, capital spending, tax income, and GST, among other things. Finance Minister Nirmala Sitharaman will announce her seventh consecutive Budget, which will spell out a plan for Viksit Bharat (developed India) by 2047 while also providing a glance into the previous ten years' performance. The Indian rupee has fallen as dollar purchasing by the Reserve Bank of India (RBI), the Indian government, defense, oil firms, and foreign investors has maintained the dollar strong.
"All inflows appear to be being absorbed by the RBI. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, expects the rupee to be range-bound on Tuesday.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was at 104.20, down 0.10 percent. Brent crude futures, the global oil benchmark, increased 0.05% to USD 82.44 a barrel.
In the domestic equities market, the 30-share BSE Sensex was up 11.54 points, or 0.01 percent, at 80,513.62 points. The wider NSE Nifty fell 7 points (0.03 percent) to 24,502.25 points. Foreign Institutional Investors (FIIs) were net purchasers in the capital markets on Monday, buying shares worth Rs 3,444.06 crore, according to exchange data. On the macroeconomic front, the government's pre-budget Economic Survey on Monday projected a cautious growth rate of 6.5 to 7% for the current fiscal year.
