A fresh inflow of foreign capital and a firm trend in domestic equity markets, where benchmark indices scaled new peaks, buoyed the rupee, which appreciated 13 paise to settle at 83.42 (provisional) against the US dollar on Tuesday.
This was one of the reasons why the rupee was able to settle at this level.
According to foreign exchange traders, reports of dollar sales by public sector banks provided support for the Indian value of the currency. On the other hand, the gains in the local unit were capped by the higher prices of crude oil.
While trading on the interbank foreign exchange market, the local currency opened at 83.52 against the dollar and reached its intraday high of 83.39 during the course of the session against the dollar.
It finally reached a settlement of 83.42 (provisional) against the dollar, registering a gain of 13 paise from its previous closing price.The value of the rupee stood at 83.55 against the US dollar on Friday, representing a decrease of one paisa.
It was because of Bakri Id that the foreign exchange markets were closed on Monday. According to Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, the rupee increased as a result of domestic markets reaching new all-time highs and also in the midst of fresh inflows of foreign funds.
In addition, there were reports that state-owned banks were selling dollars, which strengthened the rupee.
Crude oil surge
On the other hand, sharp gains were capped by a positive tone in the US dollar and a surge in crude oil prices, he said, adding that the spot price of the USD-INR pair is anticipated to trade in a range of Rs 83.10 to Rs 83.70.
At the same time, the dollar index, which measures the strength of the greenback in comparison to a basket of six different currencies, was trading at 105.06, which was 0.12 percent higher than its previous level.
During the time that market participants were waiting for additional cues from retail sales and industrial production data from the US, analysts reported that the dollar gained value as a result of hawkish comments made by officials of the US Federal Reserve.
The benchmark for the global oil market, Brent crude futures, experienced a decrease of 0.33 percent, reaching USD 83.97 per barrel. Over the course of the domestic equity market, the 30-share BSE Sensex reached a new high of 77,301.14 points, representing a rise of 308.37 points, which is equivalent to 0.40 percent.
Moroever, the broader NSE Nifty index finished the day at an all-time high of 23,557.90 points, which is 92.30 points, or 0.39 percent, higher than its previous closing price.
As per the data provided by the exchange, Foreign Institutional Investors (FIIs) were shown to be net buyers in the capital markets on Friday. These investors purchased shares with a total value of Rs 2,175.86 crore.
The robust investor sentiment was attributed by analysts to the optimistic outlook for the domestic macroeconomic environment.The growth forecast for India's current fiscal year was raised by Fitch Ratings on Tuesday to 7.2%, up from the previous forecast of 7% in March.
This increase was attributed to a recovery in consumer spending as well as increased investment.
Furthermore, the Reserve Bank of India (RBI) reported on Friday that India's foreign exchange reserves reached a new all-time high of USD 655.817 billion for the week that ended on June 7. This represents a significant increase of USD 4.307 billion.
As of the previous reporting week, the kitty had increased by 4.837 billion dollars, reaching a total of 651.51 billion dollars.