Mumbai: The rupee appreciated 48 paise to close at 82.33 against the US dollar on Thursday as the greenback retreated from its elevated levels.
Fresh foreign fund inflows and a positive trend in domestic equities also supported the local unit, forex traders said.
At the interbank foreign exchange market, the local currency opened sharply up at 82.15 and witnessed a high of 82.14 and a low of 82.52 during the day trade.
It finally settled at 82.33 against the American currency, registering a rise of 48 paise over its last close.
In the previous session on Tuesday, the rupee appreciated by 7 paise to 82.81 against the dollar.
The forex market was closed on Wednesday on account of Diwali Balipratipada.
“Rupee rose sharply as the dollar plunged against its major crosses. Weaker-than-expected economic data from the US led to a retracement in the dollar,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The expectation is that the US Federal Reserve will slow the pace of its rate hiking cycle. This sent the euro back above parity with the greenback for the first time in a month, Somaiya added.
The pound extended its gains on optimism that Rishi Sunak and his team will restore stability and credibility in the UK.
“We expect the USD/INR(Spot) to quote in the range of 82.10 and 82.50,” Somaiya said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was quoted 0.36 per cent higher at 110.09.
Global oil benchmark Brent crude futures fell 0.06 per cent to USD 95.63 per barrel.
On the domestic equity market front, the 30-share BSE Sensex rose 212.88 points or 0.36 per cent to end at 59,756.84, while the broader NSE Nifty advanced 80.60 points or 0.46 per cent to 17,736.95.
Foreign Institutional Investors (FIIs) turned net buyers in the capital markets as they bought shares worth Rs 2,818.40 crore on Thursday, according to exchange data.
“As the dollar sold off, the rupee rallied significantly after Wednesday’s holiday. However, after a strong opening, month-end dollar demand…weighed on the local unit,” said Dilip Parmar, Research Analyst, HDFC Securities.
The highlight of Thursday’s calendar will be the ECB decision, with policymakers set to deliver a second straight 75 bps hike and also a discussion on quantitative tightening.
“In the near-term, spot USD/INR is having strong support at 82 and resistance at 82.70. The pair is expected to trade in a narrow range with a bullish bias. The trend reversal will be confirmed only below 81.90,” Parmar said.
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