Mumbai: The rupee appreciated 17 paise to 85.56 against US dollar in early trade on Thursday, as the US-India trade talks made modest progress, with tariff deadline extensions on select Indian exports offering short-term relief.
Forex traders said rupee traded in a volatile but narrow range as market participants stayed on the sidelines, waiting for clarity on the US-India interim trade deal.
At the interbank foreign exchange, the rupee opened at 85.62 against the dollar, then touched an early high of 85.56, up 17 paise from its previous close.
On Wednesday, the rupee closed flat at 85.73 against the US dollar on Wednesday.
"On the positive side, US-India trade talks made modest progress, with tariff deadline extensions on select Indian exports offering short-term relief. This supports the rupee as India was excluded from the US tariff hike letters," CR Forex Advisors MD Amit Pabari said.
The US has issued tariff letters to about 20 countries so far. But India, which is negotiating a trade pact with the US, has not figured in the list of countries that have been issued tariff letters by the Trump administration.
On April 2, the US imposed an additional 26 per cent reciprocal tariff on Indian goods but suspended it for 90 days till July 9. Now it has been deferred to August 1.
However, the 10 per cent baseline tariff imposed by America remains in place.
The US is India's largest trading partner from 2021-22. During 2024-25, the bilateral trade in goods stood at USD 131.84 billion (USD 86.51 billion worth of exports, USD 45.33 billion of imports and USD 41.18 billion trade surplus).
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.19 per cent to 97.37.
Brent crude, the global oil benchmark, fell 0.03 per cent to USD 70.17 per barrel in futures trade.
"Brent crude prices rose to USD 70 barrel. For a net oil importer like India, this poses a short-term threat to the trade balance as rising crude typically means higher import bills and a heavier current account, putting additional pressure on rupee," Pabari added.
Meanwhile, in the domestic equity market, the Sensex declined 113.57 points or 0.14 per cent to 83,422.51, while Nifty fell 37.00 points or 0.15 per cent to 25,439.10.
Foreign institutional investors (FIIs) purchased equities worth Rs 77 crore on a net basis on Wednesday, according to exchange data.