The rupee on Thursday edged higher by 20 paise at 76.42 (provisional) against the US dollar, supported by positive trends in domestic equity markets and state election results.
In the interbank forex market, the local unit opened higher at 76.27 against the greenback and saw intra-day highs of 76.07 and low of 76.46.
The rupee finally closed at 76.42, registering a gain of 20 paise over the previous close.
On Wednesday, the rupee ended 38 paise higher at 76.62 against the US dollar following a fall in crude oil prices and a rebound in domestic equities.
Counting of votes was underway on Thursday in the five states where assembly elections were held recently in Uttarakhand, Uttar Pradesh, Punjab, Goa and Manipur.
The BJP is poised for a second consecutive victory in politically crucial Uttar Pradesh and dominates the trend charts in three other states, while the Aam Aadmi Party is poised for a resounding victory in Punjab.
Dilip Parmar, Research Analyst, HDFC Securities, said the rise in rupee was on account of risk appetite, while the fall in haven currencies was on the back of the rupee.
Geopolitical risks have also started to reverse and commodities have cooled, and emerging market currencies and equities have advanced.
In the short term, the rupee is expected to strengthen between 76 and 76.70, Mr Parmar said.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.13% to 98.09.
Global oil benchmark Brent crude futures rose 4.76% to $116.43 a barrel.
On the domestic equity market front, the BSE Sensex closed 817.06 points or 1.50% higher at 55,464.39, while the broader NSE Nifty ended 249.55 points or 1.53% higher at 16,594.90.
Foreign institutional investors remained net sellers in the capital markets on Wednesday as they sold shares worth Rs 4,818.71 crore, according to stock exchange data.