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The rupee rose to 91.57 per US dollar, aided by a weaker dollar index and the India–European Union free trade agreement, but gains were capped by foreign fund outflows and higher Brent crude prices.
By Anshul January 28, 2026, 10:11:40 AM IST (Published)
2 Min Read
The rupee strengthened modestly against the US dollar in early trade on Wednesday (January 28), supported by a weakening dollar index and positive sentiment following the conclusion of the India–European Union free trade agreement, even as persistent foreign fund outflows and higher crude oil prices capped gains.
The domestic currency opened higher at 91.60 per dollar at the interbank foreign exchange market and firmed up to 91.57, marking a gain of 11 paise from its previous close.
On Tuesday (January 27), the rupee had rebounded from all-time low levels to settle 22 paise higher at 91.68, after facing sustained pressure in recent sessions.
Currency traders attributed the uptick largely to global factors, particularly a sharp slide in the US dollar. The dollar index, which tracks the greenback against a basket of six major currencies, slipped to near four-year lows and was trading around 0.13% lower at 96.09.
Expectations of further US Federal Reserve rate cuts, ongoing tariff uncertainty and concerns over policy volatility in the US have weighed heavily on the dollar in recent weeks.
Market participants said the rupee’s recovery reflected a pause in aggressive dollar buying rather than a decisive shift in underlying sentiment. While the softer dollar eased one-sided pressure on the currency, traders cautioned that the broader trend in the dollar-rupee pair remains tilted upward.
The 92.00 level continues to act as a key near-term resistance, with sustained moves above it likely to test higher ranges, while central bank intervention and a weak global dollar could help stabilise the pair closer to the 90.80–91.00 zone.
Domestic cues offered mixed signals. Equity markets opened sharply higher, with the Sensex and Nifty gaining strongly in early trade, reflecting improved risk appetite. However, foreign institutional investors remained net sellers, offloading equities worth over ₹3,000 crore in the previous session, which limited support for the rupee.
Meanwhile, Brent crude prices rose over half a per cent to nearly $68 a barrel, adding to concerns for the currency of the oil-importing nation.
Sentiment also drew support from India and the European Union announcing the conclusion of negotiations on a comprehensive free trade agreement, expected to improve market access for several domestic sectors and signal India’s growing role in global trade. While the deal provided a positive backdrop, traders said its currency impact would likely play out gradually rather than trigger immediate gains.
-With agencies inputs
