The Indian rupee rose for the first time in four trades on Tuesday as a slightly weaker dollar and improved economic data helped the local currency.
The rupee closed at 82.2050 rupees against the dollar, up from 82.2950 rupees in the previous session. The rupee fell to a six-week low of 82.3725 rupees on Monday.
After declining from a five-week high as its recent rally ended, the dollar seesawed on Tuesday amid concerns about weak US economic data and the country’s debt ceiling.
LKP Securities analyst Jatin Trivedi said the rupee’s move was largely tied to global concerns, such as the US debt ceiling, which is impacting the dollar index.
Trivedi expects the rupee to trade roughly between 81.80 and 82.40 rupees.
Meanwhile, India’s goods trade deficit fell to $15.2 billion in April from $19.7 billion in the previous month.
Analysts said softening domestic inflation and a higher-than-expected trade deficit bode well for the rupee.
But analysts said the rupee has benefited from a decline so far this year and that the U.S. plan to buy oil for its strategic oil reserves could be a cause for concern for the rupee.
Oil prices have fallen nearly 13% so far this year.
CR Forex Advisors said in a memo that higher oil prices could remain a concern for the local sector, revealing more room for the USD/INR pair to break above the 82.50-82.80 level. (Reporting by Nallur Sethuraman in Mumbai, Editing by Sohini Goswami)