Rupee gains 19 paise to end at 74.68 against U.S. dollar

On Monday, the rupee had settled at 74.87 against the U.S. dollar.

The rupee gained 19 paise to close at 74.68 against the U.S. dollar on Tuesday, supported by foreign capital inflows into local IPOs amid a lacklustre trend in the domestic equity market.

At the interbank forex market, the domestic unit opened at 74.83 against the greenback and witnessed an intra-day high of 74.66 and a low of 74.86 during the day’s trade. It finally ended at 74.68 a dollar.

On Monday, the rupee had settled at 74.87 against the U.S. dollar.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.06 % to 93.94.

"After two days of lacklustre movements, the rupee has appreciated quarter percentage points backed by inflows from IPOs. While overseas markets traded sideways ahead of the U.S. Fed and Bank of England policy meeting this week," said Dilip Parmar, Research Analyst, HDFC Securities.

Dollar supply remained high on the back of IPOs, while traders may remain light in holiday truncated weeks, Mr. Parmar said, adding "Spot $/INR is expected to trade in a tight range of 74.50 to 75".

On the domestic equity market front, the BSE Sensex fell 109.40 points or 1.18 % to end at 60,029.06, while the broader NSE Nifty declined 40.70 points or 0.23 % to 17,888.95.

"Rupee traded strongly near 74.70 amid dollar weakness and Crude price holding below $ 85.00. Strong vaccine numbers in India give economic support keeping the rupee fall limited. Going ahead rupee can be seen in the range of 74.50-75.10," said Jateen Trivedi, Senior Research Analyst at LKP Securities.

Brent crude futures, the global oil benchmark, rose 0.27 % to $ 84.94 per barrel.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities the rupee appreciated against the U.S. dollar supported by continued foreign inflows into local IPOs.

Foreign institutional investors were net sellers in the capital market on Monday, as they offloaded shares worth ₹ 202.13 crore, as per exchange data.

Meanwhile, traders will also be eyeing the U.S. Fed’s policy decision on Wednesday.

"A Fed taper is priced in, the market will like to know more on the commentary from the U.S. Fed Chair Jerome Powell.

"Technically, the $/INR Spot pair ended below 21-Daily Moving Average at 74.785 levels, and another sustained trade below could pull the pair to the support zones at 74.66-74.50. A trade above could push the pair back to the Resistance zones at 74.88-75.10 levels," Iyer said.

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