The Indian rupee pared its initial losses and settled 26 paise higher at 95.44 against the US dollar on Tuesday, supported by positive domestic equity markets, a weaker greenback overseas, and a decline in crude oil prices.

The domestic currency opened the session under pressure but recovered through the day as conditions turned favourable. Gains in Indian equities boosted sentiment toward the rupee, while softness in the US dollar against major currencies made the greenback less attractive to holders. A fall in crude oil prices also lent support, as India is a major importer of oil and lower crude prices typically ease pressure on the country's import bill and current account.

Movements in the rupee-dollar exchange rate are closely watched because they influence import costs, inflation, and the returns of foreign investors in Indian markets. A stronger rupee can make dollar-denominated imports such as crude oil and electronics cheaper, while a weaker currency raises costs for importers and overseas borrowers. The exchange rate is also shaped at times by the Reserve Bank of India, which participates in currency markets to curb excessive volatility, meaning sustained one-way moves often draw policy attention.

The rupee's closing level of 95.44 marks a firmer finish for the session after the intraday recovery. Traders typically track upcoming US Federal Reserve commentary and interest rate signals, along with global crude price trends and foreign fund flows into Indian equities, as key influences on the currency's near-term direction.

Source: CNBC-TV18