Mumbai: The rupee strengthened by 41 paise to close at more than a three-week high of 73.16 against the US currency Wednesday as global crude oil prices eased and domestic equity markets staged a smart rebound.
Forex dealers said softening crude oil prices supported the rupee's upward movement.
On Tuesday, Saudi Arabia pledged to meet any supply shortfalls and replace any looming shortages due to Iranian sanctions, which will start on 4 November. Following this, Brent crude prices plunged to below $76 level before recovering to $76.03 per barrel.
Falling crude oil prices eased concerns over forex outflows amd supported selling of the US currency by exporters.
The greenback's weakness against some currencies overseas also helped the recovery in the domestic currency.
"The Indian rupee traded higher by 41 paise at 73.16 per dollar versus a previous close of 73.57 on the back falling crude oil prices and on dollar selling by banks and exporters," said Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management.
At the Interbank Foreign Exchange (Forex), the rupee opened higher at 73.18, and soon gained further ground to jump 48 paise to touch a high of 73.09 on increased selling of the American currency by exporters and banks.
The domestic unit however pared some gains and settled the day up by 41 paise at 73.16 against the US dollar, a level not seen since October 1.
On Tuesday, the local currency had ended almost flat at 73.57 against the US currency.
Moreover, the bullish trend in the equity market also boosted the local unit.
The BSE Sensex Wednesday recaptured the 34,000-mark by gaining 187 points or 0.55 percent higher at 34,033.96. The broader NSE Nifty too recovered by 77.95 points, or 0.77 percent, at 10.224.75.
Domestic institutional investors (DIIs) made purchases worth a net of Rs 116.41 crore, while foreign institutional investors (FIIs) sold shares to the tune of Rs 340.35 crore Tuesday, provisional data showed.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 73.2645 and for rupee/euro at 83.9934. The reference rate for rupee/British pound was fixed at 95.0529 and for rupee/100 Japanese yen was 65.13.
Bond markets were also firm Wednesday on easing fuel prices. The yield of most traded 10-year 7.17 percent government security softened by 2 basis points to 7.87. The yield of 7.59 percent government security maturing in 2026 softened by over 1 basis point to 7.94.
Updated Date: Oct 24, 2018 18:18 PM