The rupee firmed up by 3 paise to settle at 72.84 against the US dollar on Wednesday in a restricted trade amid muted trend in the domestic equity market.
At the interbank forex market, the local unit opened at 72.87 against the greenback and witnessed an intra-day high of 72.81 and a low of 72.88. It finally ended at 72.84 against the American currency, registering a rise of just 3 paise over its previous close.
On Tuesday, the rupee had finished at 72.87 against the American currency.
The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.01 per cent to 90.42.
“The USDINR spot is trading within the tight range of 72.75-73.15. Currently, the market is flat and volatility is muted. The upbeat sentiments on account of optimism about a global recovery and inflows into local stocks will help Indian Rupee to appreciate, but likely RBI intervention at around 72.80-75.75 zone may limit the fall in USDINR pair," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta further noted that "we will expect USDINR spot to continue to trade sideways with bearish bias in between 72.75-73.20 zone. The 72.75 mark is acting as a strong support and break of which could push prices towards 72.50. However, on upside 73.05-73.20 will continue to act as strong resistance levels."
On the domestic equity market front, the BSE Sensex ended 19.69 points or 0.04 per cent lower at 51,309.39, while the broader NSE Nifty slipped 2.80 points or 0.02 per cent to 15,106.50.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,300.65 crore on Tuesday, according to exchange data.
Brent crude futures, the global oil benchmark, rose 0.49 per cent to USD 61.39 per barrel.
"Indian rupee edged higher for the second day in row. Weakness in dollar index and foreign inflows were the prime reasons for strength in rupee. However, probable central bank intervention and higher crude oil have capped gains in rupee," said Devarsh Vakil, Deputy Head of Retail Research.
Vakil further noted that "we expect spot USDINR to consolidate in the range of 72.70 to 73.00 in coming days".
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