The rupee pared some of its initial losses and settled 3 paise down at 75.04 against the U.S. Dollar on Tuesday amid a weakening greenback overseas.
The rupee opened weak at 75.13 at the interbank forex market and shuttled between a high of 74.85 and a low of 75.17 against the American currency.
It finally finished at 75.04, down 3 paise over its previous close of 75.01.
Forex traders said while a positive trend in the equity markets and foreign fund inflows supported the rupee, factors like weak Asian currencies and rising COVID-19 cases weighed on the local unit.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.08 % to 93.46.
On the domestic equity market front, the 30-share BSE benchmark Sensex soared 748.31 points or 2.03% to close at 37,687.91, while the NSE Nifty rallied 203.65 points or 1.87% to 11,095.25.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth ₹ 7,818.49 crore on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 1% to USD 43.71 per barrel.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.82 crore, while the tally in India climbed to 18,55,745.
“The Indian rupee remained range bound today. Initially, the rupee depreciated to an intra-day low of 75.18 on speculative dollar buying by private banks.
“However, by the end of the session, the rupee appreciated back towards 75 levels supported by foreign fund inflows into the local equity markets,” said Sriram Iyer, Senior Analyst, Reliance Securities.
The focus now turns to the U.S. services number and private payrolls data, due on Wednesday, followed by the monthly jobs report on Friday.
In India, attention has now shifted to the Monetary Policy Committee’s interest rate decision, due on Thursday, he added.
“Rupee rose in today’s session following a sharp surge in domestic equities and after the dollar started to come under pressure against its major crosses. Volatility for the currency could remain low ahead of the important RBI policy statement that will be released later this week.
“Expectation is that the central bank could hold rates unchanged but commentary will be important to watch. We expect USD-INR (Spot) to quote in the range of 74.80 and 75.30,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
