The Indian rupee appreciated by 5 paise to 90.67 against the US dollar in early trading on Wednesday, helped by easing global crude oil prices and fresh buying by foreign institutional investors (FIIs).
The domestic currency opened stronger at the interbank foreign exchange market and briefly touched 90.60 per dollar before trimming some of its gains. It had ended the previous session 2 paise higher at 90.72.
Forex dealers said the fall in international oil prices supported the rupee as it reduces India’s import burden and lowers demand for the US currency. At the same time, renewed foreign fund inflows into Indian markets improved liquidity and boosted sentiment in the forex market.
Despite the early strength, the rupee could not hold on to its peak levels due to a stronger dollar overseas and a muted trend in domestic equities, which weighed on investor confidence. The dollar index remained firm against major global currencies, capping sharp gains in the local unit.
Market participants expect the rupee to trade in a narrow range in the near term, as global factors continue to drive currency movements. Fluctuations in crude oil prices, the direction of foreign capital flows and the performance of Indian stock markets are likely to remain key triggers.
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