The rupee made a strong comeback in the currency markets in early trade on Tuesday, rising by 33 paise to 72.43 against the US dollar. At the interbank foreign exchange, the rupee opened at 72.50 in morning trade and then gained further ground. It had settled at 72.76 against the greenback the previous day, amid a major selloff in the equity markets and the currency falling to its lowest level in more than 15 months. Analysts say investor sentiment may remain fragile amid concerns over the impact of the coronavirus pandemic.
The rupee has shed 1.6 per cent of its value in the past three trading sessions.
Coronavirus is now spreading much more rapidly outside China than within the country, leading the world into uncharted territory.
According to forex advisory firm CR Forex Advisors, the domestic currency is expected to trade in a range of 72.10-72.80 levels.
Globally, however, the risk sentiment improved after Japan's central bank chief said policymakers would take steps to stabilise market conditions, the advisory firm noted.
At the end of Monday's trading session, news agency Reuters quoted traders as suggesting that the rupee could weaken further with 73 per dollar level likely to be tested during the week. The analysts however, expect the Reserve Bank of India (RBI) to step in and sell dollars to prevent significant losses in the local unit.
Meanwhile, the benchmark equity indices got off to a positive start on Tuesday morning. The 30-share BSE Sensex was trading almost a per cent above the previous closing mark at 10:20 am.