Mumbai: The rupee surged 29 paise to close at a more than one-month high of 74.42 against the US dollar on Thursday following year-end dollar selling by banks and exporters amid muted domestic equities.
Lower commodity prices and gains in Asian peers also supported the rupee sentiment, analysts said.
At the interbank forex market, the local unit opened strong at 74.56 against the greenback and witnessed an intra-day high of 74.38 and a low of 74.65.
The rupee finally settled at 74.42, a level not seen since November 24. In the previous session, the rupee had settled just one paisa lower at 74.71 against the US dollar.
“Rupee, after Wednesday’s pause, started heading north to monthly high on expectation of better inflows going ahead and dollar selling from exporters on year-end. The central bank remained aside from intervening and technical selling has been seen accelerated in USDINR on breaking of support 74.50,” said Dilip Parmar- Research Analyst, HDFC Securities.
Sriram Iyer, Senior Research Analyst at Reliance Securities stated that the rupee’s gains were supported by “continuous dollar sales from foreign banks and equity-related inflows”. Most Asian currencies gained despite a stronger dollar and lent support to the local unit, Iyer said.
The dollar rose against major rival currencies in holiday-thinned trading as investors remained cautiously optimistic about the economic consequences of a surge in cases of the Omicron coronavirus variant.
According to Jateen Trivedi, Senior Research Analyst at LKP Securities, the rupee traded strong due to lack of buying interest from big banks or the RBI supported sellers to add shorts. Further, lower commodity prices helped the rupee rise towards 74.40 compared to 74.70 day ago.
“Dollar range trade did not make a difference as the rupee has seen strength on the back of lack of buying in the US dollar. Going ahead rupee can be seen in the range of 74.20-74.55,” Trivedi said.
On the domestic equity market front, the BSE Sensex ended 12.17 points or 0.02 per cent lower at 57,794.32, while the broader NSE Nifty declined 9.65 points or 0.06 per cent to 17,203.95.
Brent crude futures, the global oil benchmark, fell 0.68 per cent to USD 78.69 per barrel.
Foreign institutional investors were net sellers in the capital market on Wednesday, as they offloaded shares worth Rs 975.23 crore, as per exchange data.