Mumbai: The rupee rose by 16 paise to close at more than one-month high of 73.35 against the US dollar on Monday, marking its third straight session of gains on the back of positive domestic equities and weak American currency.
However, sharp gains were prevented on surge in crude oil prices and FII outflows, analysts said.
At the interbank forex market, the rupee opened at 73.34 and hit an intra-day high of 73.33 and a low of 73.48.
The local unit finally settled at 73.35, registering a gain of 16 paise over its previous close. On Friday, the rupee had settled at 73.51 against the American currency.
The rupee has strengthened by 56 paise in the three sessions to Monday.
“The Indian rupee appreciated amid weakness in dollar and rise in risk appetite in the global markets. Markets sentiments improved on speculation that US Federal Reserve will maintain its ultra low interest rates for quite some time,” said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth Rs 1,142.75 crore, as per exchange data.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.09 per cent to 90.15.
On the domestic equity market front, the BSE Sensex ended 295.94 points or 0.60 per cent higher at 49,502.41, while the broader NSE Nifty advanced 119.20 points or 0.8 per cent to 14,942.35.
The rupee may slip on concern that rising COVID-19 cases in India and lockdown restriction in some states may hurt economic recovery. Traders fear that worsening situation in India may put pressure on central government to announce nationwide lockdown for few days to curb outbreak, Mukadam said.
After recording over four lakh fresh cases for four consecutive days, India witnessed a single-day rise of 3,66,161 COVID-19 cases on Monday, which pushed its tally to 2,26,62,575, according to the health ministry.
Brent crude futures, the global oil benchmark, rose 0.51 per cent to USD 68.63 per barrel.
“Rupee traded in a range trade as dollar index showed some stability on Monday morning trade. Along with a steady capital market increase with PSU sector positive performance. Crude & Gold upward move kept rupee rise at check near 73.25,” said Jateen Trivedi, Senior Research Analyst at LKP Securities.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the rupee appreciated against the US dollar on Monday tracking the weaker dollar as weaker-than-expected US jobs data elevated hopes that the Federal Reserve could maintain its current level of bond purchases for an extended period of time.
Other Asian currencies were also helped by weak US jobs data, and lent support to the domestic currency, Iyer said.
The US dollar still remained under pressure on Monday afternoon trade in Asia as a weak US employment report prompted investors to exit their long positions in the greenback.
However, the dollar’s losses were capped as the US Treasury yields were higher on Monday afternoon trade in Asia, Iyer noted.
—PTI

Press Trust of India