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The rupee appreciated by 6 paise to close at 81.81 (provisional) against the US dollar on May 3 tracking weakness in the American currency overseas.
Forex traders said significant foreign fund inflows and crude prices below $75 a barrel also supported the local unit.
At the interbank forex market, the local unit opened at 81.80 against the American currency and finally closed at 81.81 (provisional), registering a gain of 6 paise over its previous close.
The rupee touched a high of 81.75 and a low of 81.86 against the dollar during the day.
on tuesday the Rupee closes at 81.87 against the US currency,
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.41% to 101.54.
Global oil benchmark Brent crude futures fell 2.04% to $73.78 per barrel.
The weakening of the US dollar and a sharp fall in crude oil prices strengthened the Indian rupee. However, weak domestic equities limited the sharp gains, said Anuj Chowdhary, research analyst at Sharekhan by BNP Paribas.
“We expect the rupee to trade with a slight downside bias amid risk aversion in global markets amid renewed apprehensions over banking crisis in the US and concerns over global economic recovery.
“However, a weak dollar and an extended fall in crude oil prices may cap a sharp fall in the rupee,” Mr. Chaudhary said.
Sustained FII inflows may also support the rupee at lower levels. Investors may remain cautious ahead of the Federal Open Market Committee (FOMC) meeting outcome and ISM Services PMI.
“Fed is expected to hike interest rates by 25 basis points. Traders may also remain cautious ahead of non-farm payrolls data later this week. We expect USD-INR spot to trade between 81.30 to 82.30 in the near term” Will do business.” Mr. Chowdhary said.
On the domestic equity market front, the 30-share BSE Sensex declined 161.41 points, or 0.26%, to close at 61,193.30 and the broader NSE Nifty declined 57.80 points, or 0.32%, to 18,089.85.
Foreign institutional investors (FIIs) were net buyers in the capital market on Tuesday as they bought shares worth Rs 1,997.35 crore, according to exchange data.