The rupee appreciated 13 paise to 73.12 against the US dollar in opening trade on Wednesday, as heavy buying in domestic equities and weakness of the American currency in the overseas market lifted investor sentiment. At the interbank forex market, the domestic unit opened at 73.16 against the US dollar and inched higher to 73.12 against the greenback, registering a rise of 13 paise over its previous close.
On Tuesday, the rupee had settled at 73.25 against the American currency. Traders said rupee was trading on a stronger note against the greenback as the dollar rally lost steam. Moreover, FPI flows into the domestic equity markets also supported the domestic unit.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.13 per cent to 89.98. ”US dollar Index extended losses this morning in Asian trade against major peers as a retreat in US yields sapped momentum from its recent rebound and investors cautiously resumed bets that it can resume sliding,” Reliance Securities said in a research note.
The euro, sterling and Japanese yen were higher against the US dollar this morning in Asian trade. On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 168.23 points higher at 49,685.34, and the broader NSE Nifty advanced 64.50 points to 14,627.95.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 571.47 crore on a net basis on Tuesday, according to provisional exchange data. On the domestic macro economic front, declining vegetable prices brought down the retail inflation to a 15-month low of 4.59 per cent in December and within the comfort zone of the Reserve Bank.
Industrial production contracted by 1.9 per cent in November, entering the negative territory after a two-month gap, mainly due to poor showing by manufacturing and mining sectors, official data showed on Tuesday. Brent crude futures, the global oil benchmark, rose 1.34 per cent to USD 57.34 per barrel.