The rupee recovered by 26 paise to 66.39 against the dollar at the Interbank Foreign Exchange in early trade on Tuesday on fresh selling of the US currency by banks and exporters.
Dealers said fresh selling of the US currency by exporters and banks, and weakening of dollar overseas supported the domestic currency.
Gains in stock markets also helped rupee strengthen against the dollar, they added.
The rupee had tumbled sharply by 82 paise, its biggest single day fall this year, to settle at 66.65 against the dollar on as global meltdown fears remained unabated.
Rating agency Moody's Investor's Service has said that India's macro-economic indicators have improved over the last few years which will help the country withstand volatility in global capital flows in coming months. It also said that recent policy measures by the government will stabilize inflation and help India grow 7% in FY16. According to Moody's and an effective announcement of the policies announced will improve India's credit profile.
Rating agency Moody's Investor's Service has said that India's macro- economic indicators have improved over the last few years which will help the country withstand volatility in global capital flows in coming months. It also said that recent policy measures by the government will stabilize inflation and help India grow 7% in FY16. According to Moody's and an effective announcement of the policies announced will improve India's credit profile.
"The positive outlook on the rating reflects Moody's view that recent and proposed policies will stabilize inflation, improve the regulatory environment, increase infrastructure investment and lower government debt ratios," Moody's said in a statement.
Tokyo's benchmark index rebounded sharply on Tuesday morning as a measure of calm returned to the market after five days of falls driven by fears Chinese growth is stalling.
The Nikkei 225 at the Tokyo Stock Exchange, which plunged more than four per cent at the open, added 1.10 per cent, or 204.22 points, to sit at 18,744.90 by the break.
The broader Topix index of all first-section shares jumped 1.46 per cent, or 21.66 points, to 1,502.53, also clawing back big losses.
On Monday, the Nikkei plunged more than four per cent to close at a six-month low.
Tokyo investors pressed the sell button again after the opening bell Tuesday, but late morning bargain buying helped push stocks back into the black as other Asian markets also recovered.
Chinese stocks tumbled again on Tuesday after their biggest decline in eight years.
The Shanghai Composite Index fell 6.4 per cent in the first minutes of trading but later trimmed some of those losses and was down 5.5 per cent at 3,035.83. The Shenzhen Composite Index for China's smaller second exchange lost 4.6 per cent.
Crude oil markets recovered somewhat on Tuesday from sharp falls in the previous session but they remained at 2009 levels as Asian equities kept tumbling, triggering fears of an economic tailspin in the region.
Crude oil markets reacted cautiously, recovering somewhat but remaining at levels comparable to the peak of the global financial crisis in 2009, suggesting that worries over the economic outlook in China are now at least equally as big as previous concerns of oversupply that has plagued the market for over a year.
US crude futures were trading up 55 cents at $38.79 per barrel at 0245 GMT, while Brent was up 61 cents at $43.30.
US stocks slid again Monday, with the Dow Jones industrial average briefly plunging more than 1,000 points in a sell-off that sent a shiver of fear from Wall Street to Main Street.
Stocks regained some of that ground as the day wore on, but the Dow finished with a loss of 588 points, the eighth-worst single-day point decline and the second straight fall of more than 500.
The slump — part of a global wave of selling touched off by signs of a slowdown in China, the world's second-largest economy — triggered worries among Wall Street professionals and ordinary Americans who are saving for retirement or a down payment on a house.
With the lease on her car up, health insurance worker Deirdre Ralph of Wayne, New Jersey, had planned to get a less pricey vehicle and invest the savings. Now she's having doubts.