The rupee on Wednesday surged by 47 paise to close at a nearly two-week high of 74.88 against the US dollar on easing global crude oil prices and rising appetite for riskier assets.
Heavy losses in the domestic equity markets, however, put some pressure on the rupee, forex dealers said.
“Indian rupee gained the most among emerging market currencies, boosted by lower crude oil prices and dollar demand while market is expecting foreign fund inflows from scheduled QIPs and IPOs in coming weeks.
“A rally in Chinese yuan, which placed near four months high against dollar, also supported regional currencies,” Dilip Parmar, Research Analyst, HDFC Securities, said.
Oil prices eased by 0.83 per cent to USD 84.37 per barrel after reports that the Chinese government was planning steps to rein in high coal prices and improve supplies.
High oil prices had stoked fears of inflationary pressures and high forex outflows from India which weighed on the rupee last week.
At the interbank forex market, the local unit opened strong at 75.10 over its previous close of 75.35 against the greenback. Later, the local unit surged to settle at 74.88, the highest level since October 7.
The local unit moved in a range of 74.83 to 75.13 in the day trade. The currency market was closed on Tuesday for the Id-E-Milad’ holiday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was marginally up 0.12 per cent at 93.84.
On the domestic equity market front, the BSE Sensex ended 456.09 points or 0.74 per cent lower at 61,259.96, while the broader NSE Nifty declined 152.15 points or 0.83 per cent to 18,266.60.
Foreign institutional investors were net sellers in the capital market on Tuesday, as they offloaded shares worth Rs 505.79 crore, according to exchange data
“Rupee gained positive momentum on the back of weakness in Crude & Gas prices in the last couple of days providing some relief to highly expensive prices.
“With PSU banking space showing positive divergence compared to other sectors rupee cheered near 74.90 compared to 75.35 on Monday. Going ahead rupee can be seen in a range of 74.60-75.15 range,” Jateen Trivedi, Senior Research Analyst at LKP Securities, said.