Rupee Recovers from All-Time Low Against Dollar; Weak Dollar, Short-Covering Aid Rebound

• The Indian Rupee rose 10 paise to 91.80 against the US Dollar on Tuesday, recovering from Friday's historic low of 92 per dollar.
• The recovery was primarily driven by a weakening US Dollar Index, which slipped to a four-month low ahead of the FOMC meeting.
• Forex traders noted the rebound was due to short-covering, not a fundamental shift, as structural pressures like geopolitical risks and foreign capital outflows persist.
• Lower crude oil prices and an increase in India's foreign exchange reserves to over USD 701 billion provided some support.
• Analysts remain cautious, expecting continued weakness due to geopolitical risks, trade tensions, and foreign portfolio outflows despite the Rupee appearing undervalued.

Why It Matters: The Rupee saw a temporary recovery against the dollar due to a weaker greenback and short-covering.