The Indian rupee rose by 22 paise in early trade on Monday, settling at ₹85.72 against the U.S. dollar, buoyed by favorable global cues, a softer dollar index, and continued foreign capital inflows. This upward movement reflects improved investor sentiment following signs of easing geopolitical tension and resilient performance in the domestic equity markets.

One of the key drivers behind the rupee’s appreciation was the subdued strength of the U.S. dollar in global currency markets. The dollar index, which tracks the greenback against a basket of major currencies, remained under mild pressure as market participants weighed recent economic data and central bank signals. The prospect of stable U.S. interest rates, combined with reduced expectations for immediate rate hikes, gave emerging market currencies including the rupee some breathing room.

Additionally, international crude oil prices hovered near lower levels, providing support to India’s current account and easing inflationary pressures. Brent crude remained below the $85 per barrel mark, a welcome development for India, one of the world’s largest oil importers. A drop in oil prices tends to support the rupee by reducing the demand for dollars to pay for energy imports.

Market experts also noted that foreign institutional investors (FIIs) continued to show confidence in Indian markets, contributing to a steady inflow of capital. FIIs were net buyers in recent trading sessions, lured by India’s robust macroeconomic fundamentals and promising corporate earnings outlook. This capital movement has helped ease pressure on the rupee and supported its upward momentum in currency trade.

On the domestic front, equity markets opened on a firm note, further reinforcing positive sentiment in the forex space. The benchmark BSE Sensex and NSE Nifty were trading higher, signaling investor optimism across sectors ranging from financials to IT. This upbeat mood has strengthened the rupee’s position even as caution lingers over global developments.

However, analysts warned that while the rupee may continue to benefit from short-term tailwinds, structural risks remain. Concerns around the upcoming U.S.-India trade negotiations, along with potential policy shifts following geopolitical developments, could reintroduce volatility. The situation is particularly fluid given the recent statements by the U.S. administration on tariff re-evaluations, and traders are closely watching whether India might be affected in the next round of tariff decisions.

Despite these uncertainties, the rupee’s ability to gain ground suggests underlying resilience, supported by a diversified economic base, growing investor confidence, and manageable inflation trends. If global conditions remain favorable and India avoids being targeted in any near-term trade restrictions, the rupee could maintain its relatively stable trajectory through the coming weeks.