The rupee continued its winning momentum for the third session in a row on Wednesday, rising 27 paise to settle at 74.19 against the US dollar, supported by gains in domestic equities and weak American currency.
Forex traders said weakness in the US dollar against its key rivals and significant foreign fund inflows boosted investor sentiment.
At the interbank forex market, the domestic unit opened at 74.49 against the US dollar and touched an intra-day high of 74.09 and a low of 74.52. It finally closed at 74.19 against the greenback, registering a rise of 27 paise over its previous close.
The rupee on Tuesday appreciated 16 paise to settle at 74.46 against the US dollar.
"Indian Rupee appreciated majorly on the back of weakness in Dollar. The dollar slipped as rising Covid-19 cases in the US forced local authorities to impose fresh restrictions to curb the outbreak.
"Moreover, US Federal Reserve Chair Jerome Powell warned that surge in Covid-19 cases poses risk to the economy and would require more support from Federal Reserve and Government," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.21 per cent down at 92.22.
Mukadam said that "rupee may trade in the range of 73.65 to 74.80 in next couple of sessions".
On the domestic equity market front, the 30-share BSE index ended 227.34 points or 0.52 per cent higher at 44,180.05 and the broader NSE Nifty surged 64.05 points or 0.5 per cent to 12,938.25.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 4,905.35 crore on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 1.01 per cent to USD 44.19 per barrel.
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