Mumbai: Rising for the second session on the trot, the rupee finished 12 paise higher at 73.05 against the US dollar on Wednesday amid a rally in domestic equities and a weak greenback overseas.
At the interbank forex market, the rupee opened at 73.11, and hit an intra-day high of 73.05 and a low of 73.14.
It finally closed at 73.05, higher by 12 paise over its last close.
On Tuesday, the rupee had settled at 73.17 against the American currency.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, slipped 0.07 per cent to 90.43.
On the domestic equity market front, the BSE Sensex ended 393.83 points or 0.80 per cent higher at 49,792.12, while the broader NSE Nifty advanced 123.55 points or 0.85 per cent to 14,644.70.
Foreign institutional investors remained net buyers in the capital market as they purchased shares worth Rs 257.55 crore on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.70 per cent to USD 56.29 per barrel.
“Indian Rupee appreciated on the back of positive domestic markets and weakness in Dollar. Market sentiments improved as US Treasury Secretary nominee Janet Yellen endorsed higher fiscal relief package to help economy to recover form disruption caused by pandemic,” said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
Further, steady FII inflows supported the rupee. However, sharp gains were prevented amid surge in crude oil prices and worries over rising coronavirus cases across the globe, Mukadam noted.
According to Rahul Gupta, Head of Research- Currency at Emkay Global Financial Services, “the focus of the market is on Biden’s inauguration for clues about his agenda in the first 100 days and whether he announces countrywide lockdown or continues Trump’s stance against China…”
IPO-related flows can keep the USD-INR spot near 73 zone but a break can push price towards 72.75, while 73.50 will act as a resistance, Gupta noted.
This is the second consecutive session of gain for the rupee, during which it has appreciated 23 paise.
“Indian rupee closed near day’s high, marking second consecutive daily gain. The dollar index remains on backfoot while domestic equity index marked a new life high following strong fund flows,” said Devarsh Vakil, Deputy Head of Retail Research.
Vakil further noted that Janet Yellen has urged US lawmakers to “act big” on the next fiscal package and prefer the market driven exchange rates.
“Market players will be focusing on any hint for market in President Biden’s inauguration speech,” he said, adding that the primary trend for USD-INR pair remains bearish with downside support at 73 followed by 72.70.