Rupee Extends Gains To End At Over 2-Week High Against Dollar

The rupee appreciated by 5 paise to settle at more than two-week high of 74.11 against the U.S. dollar on Monday tracking positive domestic equities and weak American currency.

At the interbank forex market, the domestic unit traded in a narrow range as rising Covid-19 cases offset positive sentiments surrounding the progress on the vaccine front.

AstraZeneca on Monday said that late-stage trials of its Covid-19 vaccine were "highly effective'' in preventing disease.

A vaccine developed by AstraZeneca and the University of Oxford prevented 70% of people from developing the coronavirus in late-stage trials.

The rupee opened at 74.12 against the U.S. dollar and touched a high of 74.04 and a low of 74.22 in day trade.

The rupee finally settled at 74.11 -- the highest closing level since Nov. 6 -- with gains of 11 paise. On Friday, the local unit had settled at 74.16 against the greenback.

"Rupee traded in a range after opening strong on back of weak dollar index. The tight range of 74.00-74.45 remains, on back of awaited stimulus deals from the U.S.. Crude prices scaling high give some support to USDINR as it keeps holding 74.00," said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.23% to 92.17.

On the domestic equity market front, the 30-share BSE benchmark Sensex closed 194.90 points higher at 44,077.15 while the broader NSE Nifty rose 67.40 points to settle at 12,926.45.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,860.78 crore on a net basis on Friday, according to exchange data.

Brent crude futures, the global oil benchmark, rose 1.78% to $45.76 per barrel.

"The Indian rupee ended marginally higher against the U.S. currency as regional risk sentiment improved on growing hopes of an early rollout and the efficacy of Covid-19 vaccines," Sriram Iyer, Senior Research Analyst at Reliance Securities, said.

However, further gains were capped amid speculation of the Reserve Bank of India intervention in the market, he noted.

Meanwhile, Asian currencies appreciated against the U.S. Dollar this Monday and lent support, Iyer said adding that the Korean won and the Taiwan dollar added 0.4% and 0.2%, respectively.

According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee consolidated in a narrow range after appreciating in the past few sessions following lack of cues on the domestic front.

"The currency is likely to get support as FIIs continue to pour in funds in the equity segment. In this month FIIs added around $6 billion thereby keeping the rupee higher against the U.S. dollar. In the next couple of sessions, we expect the USDINR (Spot) to trade lower and quote in the range of 73.90 and 74.40," Somaiya said.