MUMBAI, Nov 26 (Reuters) - The Indian rupee rose in early trading on Tuesday, boosted by residual dollar inflows related to the rejig of MSCI's global equity indexes, which helped it sidestep weakness in regional peers after U.S. President-elect Donald Trump's tariff threat rattled markets.

The rupee was at 84.23 against the U.S. dollar as of 09:40 a.m. IST, its highest level in nearly three weeks, following its previous close of 84.2875.

The dollar pared early gains made in Asia trading after Trump said he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China.

The dollar index was last quoted up 0.1% at 107 after touching a peak of 107.5.

Asian currencies were mostly weaker, tracking a decline in the offshore Chinese yuan which was down 0.2% at 7.25. The Mexican person declined 1.2%, while the Candian dollar weakened by 0.8%.

The rupee, however, fared better on account of residual dollar inflows related to the rebalancing of MSCI's global equity indexes, which became effective after market close on Monday, two traders said.

Foreign investors net bought over $1 billion of local stocks on Monday, helping the currency recover after declining to its all-time low of 84.5075 in the previous week.

The Reserve Bank of India's "vigilant stance will be critical in managing volatility, with interventions likely at key levels," said Amit Pabari, managing director at FX advisory firm CR Forex.

The RBI had intervened on Friday to cap weakness in the rupee and also instructed banks to trim speculative positions against the currency, Reuters reported.

Investors now await the minutes of the Federal Reserve's November policy meeting due later in the day for cues on policymakers' thinking about the future path of policy rates.

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https://www.reuters.com/markets/currencies/rupee-rises-residual-equity-index-rejig-inflows-sidesteps-weak-asia-fx-2024-11-26/