A day after settling flat, the rupee rose marginally higher by three paise against the US dollar on Friday, December 18, to close at 73.56 (provisional) amid positive domestic equities and sustained foreign fund inflows. At the interbank foreign exchange market, the domestic unit opened at 73.55 against the greenback and registered an intra-day high of 73.49. It witnessed a low of 73.57. In early trade, the local unit opened five paise higher at 73.54 against the dollar. It finally settled at 73.56 against the American currency, recording a surge of three paise over its previous close. On Thursday, December 17, the domestic unit settled flat at 73.59 against the dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading up 0.20 per cent at 90.00. According to traders, the weakness in the American currency in the overseas market supported the domestic unit. According to exchange data, the foreign institutional investors were net buyers in the capital market as they purchased shares worth ₹ 2,355.25 crore on a net basis on December 17.
“The dollar crashed on Thursday as hopes of stimulus and Brexit deal improved risk appetite and weighed on the safe haven appeal of the greenback. The dollar index broke below the 90 mark (for the first time) since January 2018,” said Reliance Securities in a research note.
“Value erosion in dollar, excessive liquidity is driving foreign investors to bet big on Indian equities, which give the rupee a slight appreciating bias in the near term,” said Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.
“There is still potential for a spurt in USDINR as covid and Brexit concerns remain along with any breakdown in US fiscal negotiations. The USDINR spot is holding the strong support of 73.50, but with broader vaccine optimism we can expect a fall towards 73.25 zone, while 73.75-74 will continue to act as a strong resistance,” said Mr. Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.