Rupee rallies for third straight session, closes 26 paise higher at 86.55 vs dollar

Rupee extended its gaining streak for the third consecutive session on Tuesday, appreciating 26 paise to close at 86.55 (provisional) against the US dollar. The rally was supported by strong domestic equity markets and a weaker greenback amid disappointing US economic data.

At the interbank foreign exchange, the rupee witnessed high volatility, opening at 86.71 before touching an intraday high of 86.54 and a low of 86.78 against the American currency. Forex traders attributed the rupee’s strength to a decline in the US dollar index and strong Asian currencies, although a surge in crude oil prices limited the gains.

On Monday, rupee went up by 24 paise to close at 86.81 against the American currency, while on Thursday, it had risen by 17 paise to end at 87.05.

According to Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, "The rupee traded higher by 0.25 rupees at 86.60, supported by strong capital market inflows as domestic institutional investor (DII) buying outweighed foreign institutional investor (FII) selling pressure. With Nifty gaining 325 points or 1.45 per cent and a strong rally in the banking sector with 1.99 per cent gains, the rupee found firm footing."

"The weak dollar index further supported the Indian currency. Unless external factors such as US economic data or a Federal Reserve policy shift alter market dynamics, the rupee's strength is likely to sustain. The rupee’s range has now shifted higher to 86.25-86.90, reflecting ongoing capital flows," he further added.

Also Read:Rupee opens higher at 86.71, up 10 paise against dollar

Dilip Parmar, Research Analyst at HDFC Securities, highlighted that the Indian rupee has posted its most significant five-day percentage gain since March 2023. "Robust economic data, optimistic market sentiment, and expectations of foreign fund inflows provided substantial support to the rupee. In the near term, the USDINR spot rate has immediate support at 86.42 and resistance at 86.90, with the technical outlook increasingly favoring rupee bulls," he said.

Dollar index slips to 103.32

Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.04 per cent at 103.32. Brent crude, the global oil benchmark, rose 1.31 per cent to 72  dollar per barrel in futures trade, capping some of the rupee’s gains.

Also Read: Final Trade: Sensex rises 1,131 pts; Nifty gains over 1% in the last five days, closes at 22,834

Stock market summary: Sensex jumps 1,131 points, Nifty settles at 22,834

On the domestic front, Indian equity markets were on a rallying spree. The Sensex surged 1,131 points to close at 75,301, while the Nifty ended at 22,834. Strong buying across all sectors lifted investor sentiment, pushing all sectoral indices into the green.