The rupee strengthened by 12 paise to 85.29 against the US dollar in early Monday trade, buoyed by strong domestic fundamentals, including rising forex reserves and robust capital inflows.
According to forex traders, the steady growth in reserves improves India's import cover, offering a critical buffer against external shocks and supporting rupee stability.
However, they cautioned that escalating tensions between India and Pakistan could weigh on the rupee, as geopolitical uncertainties typically drive investors toward safe-haven assets, triggering outflows from emerging markets and weakening local currencies.