Rupee gains 10 paise to close at 74.94 against US dollar
Mumbai: The rupee rose by 10 paise to close at 74.94 against the US dollar on Wednesday tracking positive domestic equities and weak American currency.
At the interbank forex market, the domestic unit opened strong at 74.93 against the US dollar and moved between a high of 74.83 and a low of 74.95 in the day trade.
The domestic unit finally closed at 74.94 against the greenback, registering gains of 10 paise over its previous close of 75.04 against the US dollar.
Forex traders said a positive trend in equity markets, weak American currency, and sustained foreign fund inflows supported the rupee.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.19 percent to 93.20.
On the domestic equity market front, the 30-share BSE benchmark Sensex rallied 452 points before closing down by 24.58 points or 0.07 percent at 37,663.33. The NSE Nifty inched up 6.40 points or 0.06 percent to close at 11,101.65.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 703.74 crore on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, surged 1.01 percent to USD 44.88 per barrel after Lebanon explosion sparked fears of instability.
"The Indian rupee appreciated on Wednesday against the US currency and logged the best in almost two weeks supported by the weakness of the US Dollar Index," said Sriram Iyer, Senior Analyst, Reliance Securities.
Iyer said that markets tracked the Asian currencies which took support from rising non-dollar currencies amid hopes of progress on the next round of US fiscal stimulus.
The focus now turns to the Monetary Policy Committee's interest rate decision, due on Thursday, traders said.
The Reserve Bank of India's Monetary Policy Committee (MPC) on Tuesday started its three-day brainstorming on the bi-monthly monetary policy meet. The six-member committee will announce its decision on August 6.
"The USDINR spot is trading in an indecisive market, tomorrow's RBI policy is the major trigger this week. We expect a repo rate cut of 25bps tomorrow, an absence of rate cut may weigh on the rupee. The 74.75 is acting as immediate support," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
According to Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee strengthened for the second successive session primarily on the back of broad weakness in the dollar against its major crosses and ahead of the important RBI policy statement that will be released on Thursday.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.0894 and for rupee/euro at 88.3682. The reference rate for rupee/British pound was fixed at 98.1238 and for rupee/100 Japanese yen at 70.77.