Going forward, we think that the rupee has scope to further appreciate till 73.80, says Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.
Indian rupee erased early losses and ended higher at 74.09 per dollar, amid buying seen in the domestic equity market.
It opened flat at 74.13 per dollar versus Friday's close of 74.14 and traded in the range of 74.04-74.22.
At 14:39 IST, the Sensex was up 286.15 points or 0.65% at 44168.40, and the Nifty was up 91.80 points or 0.71% at 12950.80.
"The rupee is currently drawing a lot of support from equity inflows and the fact that the dollar globally is on the backfoot. Going forward, we think that the rupee has scope to further appreciate till 73.80. However, beyond that, the RBI would step in to curtail its move, while dollar index may also rebound given the uncertain growth outlook in the U.S. That should put some downward pressure on the rupee," said Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.
Oil prices extended their gains on Monday as traders were optimistic about a recovery in crude demand thanks to successful coronavirus vaccine trials, but price gains were contained by renewed lockdowns in several countries.
"With fiscal stimulus plans remaining uncertain, speculation is growing that the Federal Reserve may further loosen monetary policy in December. Therefore, we expect the rupee to trade in the range of 74.00-74.80 for the coming week as a rebound in the dollar index is expected to support the pair. However, a rally in domestic equities may cap further gains," said ICICI Direct.