Rupee settles 7 paise higher at 76.18 against US dollar

The Indian rupee rose by 7 paise to close at 76.18 (provisional) against the US dollar on Tuesday, tracking positive domestic equities and a weak American currency in the overseas market.

This is the second consecutive day of gain for the rupee, during which it has appreciated by 28 paise.

At the interbank foreign exchange, the rupee opened at 76.33. During the session, it touched an intra-day high of 76.14 and a low of 76.44.

The domestic unit finally settled at 76.18, registering a rise of 7 paise over its previous close.

On Monday, the local unit had settled at 76.25 against the US dollar.

Meanwhile, the BSE gauge Sensex closed above the psychological 32,000-mark after more than six weeks. The index settled 371.44 points or 1.17 per cent higher at 32,114.52.

Similarly, the NSE Nifty advanced 98.60 points, or 1.06 per cent, to close at 9,380.90 – its highest closing level since March 13.

The dollar index, which gauges the greenback's strength against a basket of six currencies was trading 0.20 per cent down at 99.84.

"Today is the USD/INR April contract expiry on exchange. This April contract had been trading 40p above OTC and though a lot of longs have been rolled over, the Open Interest in the April contract is still USD 2bn. We may see buying at RBI fix today in OTC as positions get squared off on exchange," said Abhishek Goenka, Founder and CEO, IFA Global.

Forex traders said, the Indian rupee gained for the second straight day amid lower crude oil price and higher equities.

"The benchmark Nifty index touched the highest level after March 13 as government plans for stimulus and partial opening from lockdown," said Devarsh Vakil, Head Advisory, HDFC Securities.

Vakil further added that "near term rupee likely to gain strength as foreign fund inflows pick up and in anticipation of a fresh stimulus package. Spot USD-INR is having psychological support of 76 while short term barrier is at 77".

Meanwhile, Brent crude, the global oil benchmark, rose 2 per cent to USD 20.39 per barrel.

According to Motilal Oswal Financial Services Forex & Bullion Analyst Gaurang Somaiyaa, the rupee consolidated in a narrow range as market participants remained cautious ahead of the important FOMC (Federal Open Market Committee) policy statement that will be released on Wednesday.

Moreover, Q1 advance GDP number will also be important to watch and weaker-than-expected number could keep the greenback weighed down against its major crosses, Somaiyaa said.

Foreign institutional investors remained net sellers in the capital market, as they sold equity shares worth Rs 122.15 crore on Tuesday, according to provisional exchange data.

"Risk appetite in the market has got a lift as the RBI has come to ease the stress on the mutual funds, through its announcement of a special liquidity facility of up to Rs 500 billion," said Sugandha Sachdeva, VP-Metals, Energy & Currency Research, Religare Broking.

Moreover, markets are also finding some solace due to the chatter around easing of lockdown restrictions across various countries. This may pave the way for some more upside in the rupee towards 75.70 mark, Sachdeva said.

Notwithstanding the appreciation in rupee, forex traders said market participants are concerned that the sharp rise in coronavirus cases could weigh on the economy.

In India, the death toll due to COVID-19 rose to over 900 and the number of cases climbed to more than 29,400 in the country on Tuesday, according to the Union Health Ministry.

Meanwhile, the number of cases around the world linked to the disease has crossed over 30 lakh and the death toll has topped 2 lakh.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 76.1269 and for rupee/euro at 82.6241. The reference rate for rupee/British pound was fixed at 94.7348 and for rupee/100 Japanese yen at 71.03.