The rise in crude oil prices had a negative impact on the domestic unit, but robust domestic equities supported the rupee and restricted the fall, experts said.
At the interbank foreign exchange market, the domestic currency opened higher at 74.04 a dollar, but could not hold the momentum and finally settled 3 paise lower at 74.18.
During the session, the local unit reached a high of 74.02 and touched 74.30 at the lower end.
On Monday, the rupee had lost 7 paise to close at 74.15 against the US dollar.
The dollar index, which gauges the greenback”s strength against a basket of six currencies, strengthened 0.17 per cent to 92.87.
Brent crude futures, the global oil benchmark, rose 1.34 per cent to USD 42.97 per barrel.
In the equity markets, the 30-share BSE Sensex rose 680.22 points or 1.60 per cent to close at its lifetime peak of 43,277.65.
The broader NSE Nifty too ended at a record 12,631.10, up 170.05 points or 1.36 per cent.
“Rupee traded weak after the Reserve Bank of India (RBI) intervened in spot and then paid in forward to neutralise liquidity a kind of swap seen when market needs to balanced.
“The range on rupee remains near 74.00-74.75. Crude prices also inching higher crossing USD 42 and USD 40 in Brent and WTI, respectively, can keep rupee little bit weak going ahead,” said Jateen Trivedi, Senior Research Analyst (Commodity and Currency) at LKP Securities.
Foreign institutional investors remained net buyers in the capital market as they purchased shares worth Rs 4,548.39 crore on Monday, according to provisional exchange data.
“Central bank is absorbing lot of dollar flows and that is restricting the appreciation of Indian currencies. For the third consecutive session Rupee traded near 74 mark. In last two days, WTI Crude oil prices rose around 10 per cent on vaccine optimism and Biden”s US Presidential victory,” said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.
Rupee fell against the US dollar despite sharp gains in domestic and global equities, but primarily on the back of short covering and marginal rebound in dollar against its major crosses, said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
“Riskier assets got a boost after Pfizer said the experimental COVID-19 vaccine is more than 90 per cent effective based on initial trial results,” he further said.
On the domestic front, focus will now be on inflation and industrial production data that will be released this week and price rise could keep the rupee gains in check, he added. PTI BAL ANS BAL ABM
Disclaimer :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI
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