Mumbai, Nov 3 (PTI) The rupee pared its early gains to close almost flat at 74.41 on Tuesday due to dollar buying by banks and resurging crude oil prices.
The rupee opened sharply higher at 74.34 amid heavy buying in local stock markets and raced to hit the day’s high of 74.25.
The local unit, however, struggled in the later half and gave up initial gains to finally settle at 74.41, showing gain of just 1 paisa over the previous close.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.42 per cent to 93.75.
On the domestic equity market front, BSE benchmark Sensex rallied 503.55 points or 1.27 per cent to close at 40,261.13. The broader NSE Nifty jumped 144.35 points or 1.24 per cent to 11,813.50.
Foreign institutional investors emerged as net buyers in the capital market as they purchased shares worth Rs 740.61 crore on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 1.72 per cent to USD 39.64 per barrel.
'Rupee consolidated in a narrow range for the second successive session ahead of the important US Presidential election results. Expectation is that the announcement of the result could take some time but we could get some bit of clarity by this weekend.
'Market participants are also cautious ahead of the FOMC policy statement that will be released later this week. For the week, we expect the rupee to trade with a negative bias and quote in the range of 74.20 and 75.20,' Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, said.
Alankit Limited Managing Director Ankit Agarwal said that the rupee may garner support from an upswing in domestic equities on the back of upbeat economic data from China, Europe, and the US.
It is expected that exporters may sell the greenback at attractive higher dollar/rupee levels, which may further support the rupee, dealers stated.
Traders are expected to refrain from placing large bets on the movement of Indian currency in either direction amid global unprecedented situations. The US will hold its presidential election later today, wherein Democratic nominee Joe Biden is seen taking a significant lead over incumbent President Donald Trump, Agarwal said.
Key economic data from across the world soothed frayed nerves about economic recovery at a time when Europe is struggling with the second wave of accelerating COVID-19 infections, he added.
'Rupee ended higher on back of strong inflows in capital market mainly banking and financial sector. Also the dollar index kept trading muted on back of awaiting outcome of US Elections which can decide a possible trend for Dollar index.
'Crude prices saw a rise after strong decline it has witnessed in recent past few days which kept the rupee rise at check. For next couple of sessions rupee can be in a very volatile range of 73.75 - 75.25 range,' Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities said.
Global markets approach the US election day in upbeat mood as risk assets remained strong as dollar sold off against major trading currencies, Devarsh Vakil, Deputy Head Retail Research, HDFC Securities said.
'The bias for the spot USD/INR is bullish but it has risen to a level where we feel it will encounter strong resistance. Near term, the pair has resistance at 75.1 and support at 73.9,' he added. PTI BAL MR MR