Forex traders said positive domestic equities, sustained foreign fund flows, revival of business activities and weak US dollar supported the local unit, but there are still a slew of risks, including US-China trade tiff and concerns that it may jeopardise the Phase-1 deal.
The rupee surrendered all intra-day gains to provisionally settle 11 paise lower at 75.47 against the US dollar on Wednesday, even as domestic equities were trading in positive territory.
Forex traders said positive domestic equities, sustained foreign fund flows, revival of business activities and weak US dollar supported the local unit, but there are still a slew of risks, including US-China trade tiff and concerns that it may jeopardise the Phase-1 deal.
At the interbank forex market, the rupee opened strong at 75.04, but pared the gains and finally closed at 75.47 against the US dollar, down 11 paise over its last close.
It had settled at 75.36 against the US dollar on Tuesday.
During the session, the local unit witnessed an intra-day high of 75.04 and a low of 75.52.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.23 per cent to 97.44.
"Now investors have started focusing on the prospect that economies are re-opening all over the world from the pandemic. Thus, the risk sentiment has turned positive and the dollar index is subdued amongst major emerging market currencies," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta further said that despite strong inflows into equity, USD/INR spot was unable to break the crucial support of 75, and it reversed towards 75.40. “The immediate resistance lies around 75.60."
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