The rupee pared early losses and settled 44 paise higher at 81.25 (provisional) against the US dollar on Wednesday tracking a weaker greenback and a firming trend in domestic equities.
Traders said, however, that the rise in crude oil prices kept some pressure on the rupee’s strength.
At the interbank forex market, the local unit opened weak at 81.80 but pared losses and settled at 81.25 (provisional) for the day, registering a rise of 44 paise over its previous close.
During the trading session, the local unit witnessed an intra-day high of 81.25 and a low of 81.82 against the American currency.
On Tuesday, the rupee had closed at 81.69 against the US dollar.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.45% to 101.93.
Global oil benchmark Brent crude futures rose 1.38% to $87.11 a barrel.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, rupee remained volatile after Bank of Japan (BOJ) kept rates unchanged.
Inflows on the domestic front also strengthened the rupee.
“The BOJ decided to keep its yield curve tolerance band and the ultra-dowish -0.1% interest rate unchanged. The Japanese yen declined by almost over 2% after the policy statement was released,” Mr. Somaiya said.
Investors will now focus on retail sales numbers from the US
“We expect USD-INR [Spot] To trade sideways and take bids in the range of 81.20 and 81.70,” Mr. Somaiya said.
On the domestic equity market front, the 30-share BSE Sensex advanced 390.02 points or 0.64% to close at 61,045.74, while the broader NSE Nifty advanced 112.05 points or 0.62% to 18,165.35.
Foreign institutional investors (FIIs) turned net buyers in the capital market on Tuesday as they bought shares worth ₹211.06 crore, according to exchange data.