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Mumbai, May 4 (PTI) Rising for the second day in a row, the rupee closed 10 paise higher at 73.85 against the US currency on Tuesday on dollar selling by traders.
A stronger dollar in the global markets, losses in the domestic equities and high crude oil prices, however, restricted the gain in the local unit.
"The Indian Rupee appreciated for the 2nd successive session against the US Dollar this Tuesday as traders trimmed their dollar long positions," said Sriram Iyer, Senior Research Analyst at Reliance Securities.
At the interbank forex market, the rupee opened at 73.83, and hit an intra-day high of 73.76 and a low of 73.97. On Monday, the rupee had settled at 73.95 against the American currency.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, surged 0.42 per cent to 91.33.
"Rupee traded strong as capital markets witnessed some sell-off. There is some support to USDINR at lower levels near 73.80 as crude prices hold rates that can keep prices on rupee resistance beyond 73.75. Going ahead rupee can be seen in a range of 73.75-74.25," said Jateen Trivedi, Senior Research Analyst at LKP Securities.
On the domestic equity market front, the BSE Sensex ended 465.01 points or 0.95 per cent lower at 48,253.51, while the broader NSE Nifty declined 137.65 points or 0.94 per cent to 14,496.50.
Foreign institutional investors were net sellers in the capital market on Monday as they sold shares worth Rs 2,289.46 crore, as per exchange data.
Brent crude futures, the global oil benchmark, rose 1.81 per cent to USD 68.78 per barrel.
According to Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas, "Indian Rupee appreciated amid dollar inflows. However, sharp gains were prevented on strong dollar, surge in crude oil prices and risk aversion in the domestic market".
The dollar gained strength on expectation of improved economic data from the US.
Meanwhile, market sentiments are hurt on concern that rising COVID-19 cases in India and lockdown restriction in some states may hurt economic recovery.
India reported more than 3 lakh new cases for a 13 consecutive day. Oil prices rose on optimism that demand for fuel may get a boost as economic data from the US and Euro Area signals economic recovery.
The rupee may trade in the range of 73.50 to 74.25 in next couple of sessions, Mukadam added.
"Indian rupee outperformed among Asian currencies following dollar inflows through PowerGrid InvIT IPO and slower virus case counts in the last couple of days," said Dilip Parmar, Research Analyst, HDFC Securities.
The near-term trend for rupee remains on the bearish side following a weaker domestic macro environment which leads to fund outflows. Historical data also suggests rupee depreciation in May month, Parmar said. PTI DRR