Rupee spurts 41 paise to 2-week high of 81.41 against US dollar on forex inflows

The rupee rose by 41 paise to close at a two-week high of 81.41 against the US dollar on Wednesday as a weak greenback in the overseas market and huge foreign fund inflows into the capital markets boosted investor sentiment.

At the interbank foreign exchange market, the local unit opened at 81.63 and touched an intra-day high of 81.30 and a low of 81.64 against the greenback.

The local unit finally settled at 81.31 -- the highest closing level since November 16 -- registering a rise of 41 paise over its previous close. On Tuesday, the rupee declined 4 paise to close at 81.72 against the US dollar.

Heavy FII inflows into capital markets also supported the rupee. According to the provisional exchange data, FIIs purchased equities worth Rs 9,010.41 crore on net basis in the cash segment.

The Indian rupee registered the first monthly gains in the past eleven-months following a rebound in the risk assets, lower crude oil prices and foreign fund inflows, said Dilip Parmar, Research Analyst, HDFC Securities.

"It is poised to end the month 1.6 per cent higher, its biggest gain since August 2021," Parmar said.

Jateen Trivedi, VP Research Analyst at LKP Securities said, “Rupee traded positive taking support of 81.65 on back of dollar index weakness from failing to cross above 107. Rupee range can be seen between 81.25-81.75. US GDP data QoQ expected higher at 2.7 per cent compared to 2.6 per cent previously later in the day will play prime importance."

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.29 per cent to 106.51.

According to Parmar, the dollar index slipped, weighed by ongoing demand for riskier assets as investors speculated that China may gradually unwind its Covid curbs.

Global oil benchmark Brent crude futures advanced 2.13 per cent to $84.80 per barrel.

Forex traders said investors will focus on the US Federal Reserve Chairman Jerome Powell's speech and the release of key domestic macro economic data for further cues.

India's economic growth slowed to 6.3 per cent in the September quarter of 2022-23 compared to 13.5 per cent in preceeding three months mainly on account of contraction in output of manufacturing and mining sectors, as per a government data released on Wednesday.

The government's fiscal deficit in end-October touched 45.6 per cent of the full year Budget Estimate, according to the data released by the Controller General of Accounts (CGA).

On the domestic equity market front, the 30-share BSE Sensex advanced 417.81 points or 0.67 per cent to end at 63,099.65, while the broader NSE Nifty gained 140.30 points or 0.75 per cent to 18,758.35.