Rupee gains 4 paise against the US dollar

Mumbai: The Indian rupee opened 1 paisa higher against the US dollar on Wednesday amid upbeat domestic equities and a weaker greenback.

Rupee opened at 73.99 against the US dollar, compared with the previous close of 74.00. At 10:12 am, it was up 4 paise at 73.96.

The dollar nursed losses as progress in developing a novel coronavirus vaccine and expectations for a fiscal boost from a new U.S. government triggered a shift of funds from the greenback to riskier assets, Reuters reported.

On Tuesday, rupee rose after consolidating in a narrow range for the past couple of sessions as domestic equities trend higher on back of FII fund flow in the equity segment.

“Consistent fund inflows has been one of the major factors that has led to appreciation in the rupee. In this month FII inflows figure has touched levels of $7.2billion suggesting that rupee gains could remain elevated,” Motilal Oswal analysts said in a note.

The currency could also get support as the dollar retracted against its major crosses in yesterday’s session after data showed consumer confidence came in marginally lower as compared to the previous month.

“Today volatility for the dollar could increase ahead of the important preliminary GDP and FOMC meeting minutes that will be released in the evening session. Better-than-expected growth numbers could keep losses capped for the dollar,” they said.

“For today, we expect the USDINR (Spot) to trade lower and quote in the range of 73.90 and 74.40,” they added.

Euro is trading higher despite concerns raised by the ECB of painful “cliff effects” for households and companies if governments and regulators phase out the economic support they have provided to cushion the impact of the coronavirus pandemic.

However, the broad weakness in the dollar is likely to keep the Euro supported at lower levels in the next few sessions, according to Motilal Oswal analysts.