The market is positioning for better dollar inflows this quarter amid big bang IPOs plans.
The rupee surged 23 paise to close at 74.35 (provisional) against the U.S. dollar on Wednesday, tracking gains in domestic equity markets.
At the interbank forex market, the local unit opened up at 74.54 against the greenback and witnessed an intra-day high of 74.30 and a low of 74.55. It finally settled at 74.35, a rise of 23 paise over its previous close.
In the previous session, the rupee tumbled 30 paise to close at 74.58 against the U.S. dollar.
"Rupee erased previous day’s loss on stronger domestic equities and the weaker dollar index. Dollar selling on behalf of big corporates also added strength in rupee while central bank remains aside from intervening," said Dilip Parmar, Research Analyst, HDFC Securities.
The market is also positioning for better dollar inflows this quarter amid big bang IPOs plans, Mr. Parmar added.
Dollar index reversed gains taking cues from fall in U.S. Treasury bond yields ahead of the Federal Open Market Committee (FOMC) meeting minutes.
"USD/INR expected to trade lower in coming days and could find near term support around 74 before heading towards medium-term trend line support of 73.70 while on the higher side 74.70 becomes the resistance," Mr. Parmar noted.
On the domestic equity market front, the BSE Sensex ended 367.22 points or 0.61 % higher at 60,223.15, while the broader NSE Nifty jumped 120.00 points or 0.67 % to 17,925.25.
Meanwhile, the dollar index, which measures the greenback’s strength against the basket of six currencies, fell 0.12 % to 96.14.
Brent crude futures, the global oil benchmark, was trading 0.05 % higher at $ 80.04 per barrel.
Foreign institutional investors were net buyers in the capital market on Tuesday, as they purchased shares worth ₹ 1,273.86 crore, as per stock exchange data.
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