Rupee rises 9 paise to 73.02 per US dollar

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Mumbai, Jan 4 (PTI) The rupee appreciated by 9 paise to close at a four-month high of 73.02 against the US dollar on Monday, supported by sustained foreign fund inflows and weakness of the American currency overseas.

Traders said approval to two COVID-19 vaccines in the country also improved sentiments.

India's drugs regulator on Sunday approved Oxford-AstraZeneca's COVID-19 vaccine Covishield, manufactured by the Serum Institute, and indigenously developed Covaxin of Bharat Biotech for restricted emergency use in the country, paving the way for a massive inoculation drive.

At the interbank forex market, the domestic unit opened at 72.93 against the US dollar and witnessed an intra-day high of 72.90 and a low of 73.03.

The local unit finally settled at 73.02, registering a rise of 9 paise over its previous close. This is the rupee's highest level since September 1, 2020, when it had closed at 72.87.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.51 per cent to 89.47.

'Indian Rupee appreciated amid weakness in dollar and surge in stock markets. Market sentiments improved on hopes of global economic recovery from pandemic buoyed by the rollout of vaccine and extraordinary fiscal and monetary stimulus,' said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Further, the rupee gained strength on steady FII inflows and improved economic data, Mukadam said, adding that it may trade in the range of 72.75 to 73.55 in the next couple of sessions.

India's manufacturing sector activity strengthened in December, with manufacturers stepping up production and input buying amid efforts to rebuild their inventories following business closures earlier in the year, PMI data showed.

The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) was at 56.4 in December, a tick higher than November's 56.3 and above the critical 50 threshold for the fifth straight month.

On the equity market front, the BSE Sensex ended 307.82 points or 0.64 per cent higher at a record 48,176.80, while the broader NSE Nifty advanced 114.40 points or 0.82 per cent to its new all-time peak of 14,132.90.

Foreign institutional investors purchased shares worth Rs 506.21 crore on a net basis on Friday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, advanced 1.18 per cent to USD 52.41 per barrel.

According to Devarsh Vakil, Deputy Head of Retail Research, 'Indian rupee started the week with optimism and surged to new four-month highs on optimism that a COVID-19 vaccine rollout. Dollar's broad weakness and risk-on sentiments also supported EM Asian currencies.' Recent data of trade balance and manufacturing PMI data signaling steady recovery in domestic economy also boosted investor sentiment. 'Spot USD-INR is expected to trade lower and head towards 72.75 levels,' Vakil noted.

'The Indian Rupee appreciated against the US currency tracking upbeat Asian peers on the back of a broad decline in the dollar index,' said Sriram Iyer, Senior Research Analyst at Reliance Securities.

The Chinese yuan led Asian currencies higher, after strengthening to an over-two-year high of 6.44 to the dollar earlier in the session. Other Asian currencies like the Indonesian rupiah, the Korean won and the Singapore dollar also appreciated against the Greenback this Monday, Iyer said.

Traders will be eyeing the minutes of the December Fed meeting, the US ISM manufacturing and non-manufacturing data and the US monthly jobs report, he added. PTI DRR ABM ABM