Mumbai, Aug 26 (PTI) The rupee pared some of its early gains to settle 3 paise higher at 74.30 against the US dollar on Wednesday supported by positive domestic equities and sustained foreign fund inflows.
At the interbank forex market, the domestic unit opened weak at 74.34 against Tuesday's closing of 74.33. The unit finally ended at 74.30 against the greenback, higher by 3 paise over its previous close.
'The Indian rupee ended flat on Wednesday against the US dollar for the second straight day as markets turned cautious ahead of the Fed speech from Jerome Powell tomorrow,' said Sriram Iyer, Senior Research Analyst, Reliance Securities.
Iyer said market sentiments remain upbeat supported by optimism surrounding the US-China trade deal and foreign fund inflows into the domestic equity markets.
However, appreciation was limited due to likely intervention by the central bank in the spot and forwards market to counter the impact of dollar portfolio inflows, he said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.06 per cent to 93.07. Brent crude futures, the global oil benchmark, rose 0.02 per cent to USD 45.87 per barrel.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,481.20 crore on Tuesday, according to provisional exchange data.
The 30-share BSE benchmark Sensex rose by 230.04 points or 0.59 per cent to close above the 39,000-mark for the first time in six months. The NSE Nifty advanced 77.35 points or 0.67 per cent to finish at 11,549.60.
'Rupee market remained cautious ahead of Federal Reserve Chair Jerome Powell's speech at Jackson Hole retreat due on Thursday and Friday, where the central bank chair is expected to comment on the direction of US inflation and monetary policy ahead,' said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.
According to Devarsh Vakil, Deputy Head Retail Research, HDFC Securities, going ahead, dollar directional trend will be determined by the Powell’s remarks at Jackson Hole.
'On Tuesday, the RBI resumed the 'operation twist' to hold bond yields. These measures have kept Indian real bond yields at negative levels, which will also hold back the rupee,' he said. PTI DRR MR