Mumbai: The rupee surged 11 paise to close at an over three-month high of 73.94 against the US dollar on Tuesday, marking its third straight session of gains amid a weak American currency overseas and a firm trend in domestic equities.
At the interbank forex market, the local unit opened strong at 73.94 against the greenback and witnessed an intra-day high of 73.83 and a low of 74.00. It finally settled at 73.94, a rise of 11 paise over its previous close.
In the previous session, the rupee had settled at 74.05 against the greenback.
On the domestic equity market front, the BSE Sensex ended 221.26 points or 0.37 per cent higher at 60,616.89, while the broader NSE Nifty advanced 52.45 points or 0.29 per cent to 18,055.75.
Meanwhile, the dollar index, which measures the greenback’s strength against the basket of six currencies, slipped 0.11 per cent to 95.88.
Brent crude futures, the global oil benchmark, was trading 1.52 per cent higher at USD 82.10 per barrel.
Foreign institutional investors were net sellers in the capital market on Monday, as they offloaded shares worth Rs 124.23 crore, as per stock exchange data.
“Rupee extended gains in Tuesday’s trade following a surge in risk assets. During the day it made a high of 73.83, from where it has retraced some points on probable RBI intervention. However, it closed to its strongest level since September 28th,” said Dilip Parmar, Research Analyst, HDFC Securities.
In the near-term, spot USD-INR is expected to stay bearish unless there is global risk-aversion or RBI heavily intervenes in the market, Parmar noted.
“From the level perspective, breaking of 73.80 will lead to further selling and we could see a level of 73.50 while on the higher side 74.20 becomes immediate resistance,” he said.
According to Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd, the rupee closed higher on the back of ongoing corporate dollar sales, FPI inflows and carry trade selling.
“Rupee is trading at the highest levels since mid-November. We suspect RBI intervention may increase as USD-INR is trading below 74. However, bias remains downward. Over the near term, we expect a range of 73.60 and 74.30…,” Banerjee said.
“The Indian Rupee appreciated against the US Dollar for the third straight session on Tuesday to settle at an over 3-month high assisted by gains in regional currencies and fund flows,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Foreign investors have bought around USD 395 million of Indian equities so far in January, compared with net outflow of USD 2.5 billion in November and December.
Furthermore, inflows pertaining to Shriram Transport Finance’s USD 475-million bond issue also aided the local unit, Iyer said.