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Indian rupee strengthened against the US dollar in early trade on Tuesday after India’s retail inflation eased to 3.54% which was the lowest in last 5 years and has dipped below RBIs targeted rate of 4%, while direct tax mop up rose by 22.5% over last year and India's Industrial Production (IIP) growth rate stood at 4.2% for June-24. However, weak domestic equities and foreign fund outflows limited the gains for the local unit. Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth Rs 4,680.51 crore, exchange data showed. Traders are awaiting critical US inflation and Retail Sales reports with Fed commentary that could affect the likelihood of rate cuts in September.

The partially convertible currency is currently trading at 83.96, stronger by 1 paise from its previous close of 83.97 on Monday. The currency touched a high and low of 83.9650 and 83.9475 respectively.