Mumbai, Apr 27 (PTI) The rupee appreciated by 7 paise to close at 74.66 against the US dollar in its second day of gains on Tuesday on dollar selling by exporters and a rally in Indian equities.
The local unit continued to rise against the dollar on upbeat risk sentiments even as investors were cautious ahead of the US Federal Reserve's meeting ending on Wednesday.
At the interbank forex market, the rupee opened strong at 74.65 against the greenback and witnessed an intra-day high of 74.51 and a low of 74.73.
It finally ended at 74.66 against the American currency, registering a rise of 7 paise over its previous closing. On Monday, the rupee had settled higher at 74.73 against the American currency.
'Indian rupee continues the upward momentum started on Monday on upbeat risk sentiments,' said Dilip Parmar, Research Analyst, HDFC Securities.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.20 per cent to 90.98.
'Dollar is treading water before the Fed meeting outcome later tonight. The Federal Reserve will remain accommodative at its meeting despite robust growth and think of trimming its USD 120 billion in monthly asset purchases at end of the year,' Parmar said.
He further noted that 'we could see month end adjustment tomorrow and USDINR likely to show 74.50 odd levels while on higher side 75.20 remains strong resistance.' Brent crude futures, the global oil benchmark, rose 0.34 per cent to USD 65.87 per barrel.
On the domestic equity market front, the BSE Sensex ended 557.63 points or 1.15 per cent higher at 48,944.14, while the broader NSE Nifty advanced 168.05 points or 1.16 per cent to 14,653.05.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 1,111.89 crore on Monday, according to exchange data.
'The rupee appreciated against the US Dollar, supported by a rebound in local equities and exporters' dollar sales,' said Sriram Iyer, Senior Research Analyst at Reliance Securities.
The dollar index was trading higher in Asia while most Asian currencies were mixed. However, trading in currencies was largely subdued, ahead of this week's Federal Reserve two-day meeting ending on Wednesday, Iyer said.
This is the second straight session of gain for the rupee, during which it has appreciated 35 paise.
'Rupee traded in a narrow range but with an appreciation bias against the US dollar following a surge in domestic equities,' said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Somaiyaa further said that market participants remained cautious ahead of the important Federal Open Market Committee (FOMC) policy statement scheduled to be released on Wednesday.
'Expectation is that there may be no change in policy rates but commentary from the Fed Chairman could trigger volatility for the greenback. We expect the USDINR (Spot) to trade sideways and quote in the range of 74.40 and 75.20,' Somaiyaa said. PTI DRR MR