Rupee snaps 2-day losing streak, closes up by 8 paise at 73.76

MUMBAI: The rupee snapped its two-day losing streak to settle higher by 8 paise at 73.76 against the US dollar on Wednesday, tracking strong domestic equities and sustained foreign fund inflows.

At the interbank forex market, the local unit opened at 73.89 against the greenback and witnessed an intra-day high of 73.73 and a low of 73.90.

It finally ended at 73.76 against the American currency, registering a rise of 8 paise over its previous close.

On Tuesday, rupee had settled at 73.84 against the American currency. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.29 per cent to 90.39.

"Rupee rebounded after two days of decline. Risk-on sentiments along with a weaker dollar index supported the local currency.

The pound advanced against the dollar as the EU's chief Brexit negotiator said the two sides were ready to make 'a final push'," said Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities.

Vakil further noted that the near term outlook for spot USDINR remains range bound with higher side resistance at 74.1.

On the domestic equity market front, the BSE Sensex ended 437.49 points or 0.95 per cent higher at 46,444.18, while the broader NSE Nifty advanced 143.85 points or 1 per cent to 13,610.15.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,153.00 crore on a net basis on Tuesday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 0.02 per cent to USD 50.09 per barrel. According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee appreciated marginally against the US dollar as regional currencies recovered from Tuesday's selloff triggered by the new coronavirus variant.

"The Dollar Index was weak in this Wednesday afternoon trade amid fresh uncertainty over the US fiscal stimulus package and government funding," Iyer said.

Meanwhile, the Euro and the British pound were trading with small gains ahead of the Brexit deal deadline.

"Rupee rose after consolidating in a narrow range in Tuesday's session following gains in domestic equities.

Gains for the currency extended also after the dollar retraced against its major crosses," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

For the next couple of sessions, the USDINR (Spot) is expected to trade sideways and quote in the range of 73.50 and 74.05, Somaiya added.