Mumbai:
The rupee surged by 30 paise to settle at a one-and-a-half month high of 73.60 against the US dollar on Tuesday, buoyed by foreign fund inflows and heavy buying in domestic equities.
At the interbank forex market, the domestic unit opened at 73.83 against the US dollar and witnessed an intra-day high of 73.59 and a low of 73.83.
The local unit finally closed at 73.60 against the American currency, a level not seen since October 22. On Monday, the rupee fell by 10 paise to settle at 73.90 against the US dollar.
“The rupee traded strongly on the back of inflow of money into capital markets as rupee took support near 73.95 levels,” Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was up 0.01 per cent to 90.80.
Meanwhile, foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,792.06 crore on a net basis on Monday, according to exchange data.
On the domestic equity market front, the BSE Sensex ended 181.54 points or 0.40 per cent higher at 45,608.51, while the broader NSE Nifty jumped 37.20 points or 0.28 per cent to 13,392.95.
Brent crude futures, the global oil benchmark, fell 0.35 per cent to USD 48.62 per barrel.
“The Indian rupee appreciated against the US currency on the back of surging dollar inflows into local equities. However, possible central bank intervention to mop up dollar inflows trimmed gains on the local unit,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
According to Devarsh Vakil, Deputy Head, Retail Research, HDFC Securities, Indian rupee appreciated sharply on the back of strong foreign fund inflows in domestic equities.
“The recent pause in dollar index weakness could be temporary and fresh selling can be seen after US stimulus announcement or an eventual agreement on the EU Recovery fund and Brexit negotiations,” Vakil said.
Further, the bias for the rupee along with other Asian currencies remains bullish following broad-based weakness in the greenback and continuous flow of foreign fund inflows into emerging markets. The rupee has near term support at 73.4 and resistance at 74 level, he noted.
