The rupee surged 20 paise to close at 74.38 against the US currency on Wednesday, propped up by foreign banks' dollar sales and fund inflows into domestic equities.
At the interbank forex market, the local unit opened at 74.54 against the greenback and witnessed an intra-day high of 74.30 and a low of 74.55. It finally settled at 74.38, a rise of 20 paise over its previous close. In the previous session, the rupee had tumbled 30 paise to close at 74.58. "Rupee erased previous day's loss on stronger domestic equities and the weaker dollar index. Dollar selling on behalf of big corporates also added strength in rupee...," said Dilip Parmar, Research Analyst, HDFC Securities.
The market is also positioning for better dollar inflows this quarter amid big bang IPO plans, Parmar added. Dollar index reversed gains taking cues from fall in US Treasury bond yields ahead of the Federal Open Market Committee (FOMC) meeting minutes.
"USD/INR is expected to trade lower in coming days and could find near term support around 74 before heading towards medium-term trend line support of 73.70 while on the higher side 74.70 becomes the resistance," Parmar noted. On the domestic equity market front, the BSE Sensex ended 367.22 points or 0.61 per cent higher at 60,223.15, while the broader NSE Nifty jumped 120 points or 0.67 per cent to 17,925.25.