Snapping a six-day losing run, the rupee on Monday closed six paise higher at 55.57 against the US dollar on the back of good inflows in equities and dollar selling by some exporters.
A weak US dollar overseas also aided the rupee sentiment.
The rupee commenced lower at 55.70 a dollar from previous close of 55.63. It immediately touched a low of 55.78 on initial caution in domestic equities and sustained dollar demand from importers, mainly oil refiners to meet their month end requirements.
However, a solid surge in local stocks and revival of dollar selling by exporters pushed the rupee up to a intra-day high of 55.52. It finally settled at 55.57, showing a rise of six paise or 0.11 per cent.
In six trading sessions (May 17 — May 24), rupee had plunged by 86 paise or 1.57 per cent on worries over US monetary stimulus withdrawal and a spate of dollar buying.
The Indian benchmark S&P BSE Sensex on Monday flared up by 326.44 points, or 1.66 per cent, amid FIIs pumping in over RS 400 crore in domestic equities, shows data from stock bourses.
The dollar index, a gauge of six major currencies, was down by 0.12 per cent.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: “Today, rupee appreciated by over 0.10 per cent taking cues from positive equity markets, which closed up. The dollar index traded weak mainly against the euro and yen which further helped the rupee to trade strong. As Rupee May futures contract is expiring on Wednesday, it is expected to trade & close within 55.35 — 55.85 range.”
“Rupee was trading in a narrow range on account of limited volatility because of holiday in US markets. The weakness in dollar index and slight recovery in euro made the rupee to ease a bit,” said Abhishek Goenka, Founder and CEO, India Forex Advisors.
The rupee sustaining above 55.40 levels could drive it towards another record low level against dollar, he added.
Premium for forward dollar softened further on sustained receipts by exporters.
Benchmark six-month forward dollar premium payable in October eased to 144-1/2-146-1/2 paise from last close of 146-1/2-148 paise.
Far-forward contracts maturing in April declined to 302-1/2-304-1/2 paise from 305-307 paise.
The RBI fixed the reference rate for the US dollar at 55.6198 and for the euro at 71.9580.
The rupee recovered slightly against pound sterling to 84.08 from last Friday’s close of 84.10.
Rupee also bounced back against the euro to 71.93 from 72.14.
It, however, declined further against against the Japanese yen to 55.04 per 100 yen from last close of 54.90.