With a gain of 8 paise for the second day running, the Indian rupee was higher on Tuesday by closing at 83.79 (provisional) to the US dollar. The upward movement in the INR vs USD rate was accompanied by a favorable movement in domestic equity markets, the weakening of the US dollar, and the impact of the decline in crude oil prices.

In the interbank foreign exchange market, the rupee started at 83.86 against the greenback in the INR vs USD rate, and, from this, rallied or dropped within a bandwidth of 83.76 to 83.88 during the trading session, as was evidenced by the trading volume. It then stabilized at 83.79, up by eight paise from its previous close.

Some of the forex traders explained that while the rupee was on the rise, the outflow of foreign investors’ funds slowed down further appreciation. However, due to domestic as well as a few external factors market sentiment of the currency was able to sustain firm.

In the global market index of the greenback against the global currencies, in particular, the basket of six currencies fell by 0.04% to 101.68. At the same time, Brent crude – the global reference price for oil – declined by 0.31% to USD 77.42 per barrel and further supported the rupee through a decrease in import costs.

In the domestic equity markets, BSE Sensex increased by 378.18 points, or 0.47%, to end at 80,802.86; the NSE Nifty was up 126.20 points, or 0.51%, to reach 24,698.85. This situation was evidenced by the strong performance of these indices, which boosted investors’ confidence and, by extension, the rupee.

But FIIs continued to be bearish in the capital markets on Monday, selling more shares than buying at Rs 2,667.46 crore out of the total populated amount, according to the stock exchanges. Another headwind they were experiencing was this selling pressure from FIIs, which really threatened the rupee’s northward journey, although there were other supportive factors.

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