Rupee rises by 7 paise to 73.38 in line with Asian peers

The rupee strengthened by 7 paise to close at 73.38 against the US dollar on Monday, extending its gains for the second day on the back of firm Asian currencies and weak crude oil prices.

Forex dealers said inflows into Indian equities and firming Asian currencies against the dollar lent support to the local currency.

At the interbank forex market, the domestic unit opened at 73.43 and later rose to a high of 73.26 in the day trade.

The rupee pared some of its gains to finally settle the day at 73.38 against the greenback, registering a rise of 7 paise over its previous close of 73.45.

"The Indian rupee appreciated against the US dollar for the second consecutive session tracking a broad uptick in regional currencies, even as risk appetite across Asia was largely muted," Sriram Iyer, Senior Research Analyst at Reliance Securities said.

He further noted that "flows into the Indian equities lent support to the domestic unit".

The Chinese yuan, the Singapore dollar, the Thai baht and the Indonesian rupiah were up at least 0.3 per cent each in afternoon trade, he said.

Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said tracking the decline in the dollar index, long bets in the domestic unit have surged in line with other Asian peers.

"As the US Fed looks inclined to continue with a low interest rate regime for several years to support the economic recovery path, the dollar index has remained under pressure. On the other hand, the RBI also seems to have given a pause to dollar buying spree to build its forex war chest, which has provided room for the local unit to edge higher," Sachdeva said.

Going ahead, the rupee has strong support at 74 mark, while 72.80 remains a stiff hurdle on the higher side. The Indo-China border tensions will keep the uncertainty alive for the rupee, while the trajectory of greenback shall also provide further cues, Sachdeva noted.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.29 per cent to 93.19.

On the domestic equity market front, the 30-share BSE benchmark Sensex plunged by 811.68 points or 2.09 per cent to 38,034.14. The NSE Nifty tumbled 254.40 points or 2.21 per cent to finish at 11,250.55.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 205.15 crore on a net basis on Friday, according to exchange data.

Brent crude futures, the global oil benchmark, fell 2.04 per cent to USD 42.27 per barrel.