Extending its gain against the American currency, the Indian rupee firmed up further by 8 paise to close at 66.44 on persistent selling of dollars by banks and exporters in view of persistent foreign capital inflows amidst weakness in greenback overseas.
Firm equity market also boosted the rupee value against the dollar to some extent, a forex dealer said.
Foreign portfolio investors (FPIs) and Foreign Institutional Investors (FIIs) bought shares worth a net Rs 512.22 crore yesterday, as per provisional data released by the stock exchanges.
The rupee resumed steady at 66.52 per dollar at the Interbank Foreign Exchange (Forex) market, but dropped to 66.5950 on month-end dollar demand from importers.
However, it recovered afterwards to 66.40 on selling of dollars by banks and exporters before ending at 66.44, showing a gain of 8 paise or 0.12 per cent.
The domestic currency has gained by 18 paise or 0.27 per cent in two days.
Meanwhile, the dollar index was down 0.09 per cent against a basket of six currencies in the late afternoon trade.
The RBI fixed the reference rate for the dollar at 66.5460 and euro at 75.1770.
In cross-currency trades, the rupee dropped further against the pound sterling to finish at 96.98 from 96.83 yesterday.
It also moved down further against the euro to 75.13 per euro from 75.06 per euro previously.
However, the domestic currency moved up against the yens to 59.67 per 100 yens from 59.97 yesterday.In the overseas market, the dollar traded mixed in the afternoon trade against the yen in a range-bound trading session today, with many traders unwilling to expose themselves to extra risk ahead of monetary policy meeting in Japan.
The Federal Reserve concludes its two-day policy meeting on Wednesday, but even then caution could prevail as investors will shift their attention to the Bank of Japan’s policy meeting outcome Thursday. Although the Fed is widely expected to stand pat on rates, expectations remain high for the BOJ to take easing steps.
Pramit Brahmbhatt of Veracity Financial Services said, “The rupee continued to take cues from domestic equity market, as the rupee opened on a positive note compared to close of previous day. In domestic equity market, the Nifty gained 17 points. So, this optimism in domestic equity market helped the rupee to appreciate. Thus the rupee appreciated by 8 paise at 66.44/USD.”
In forward market, the premium for dollar dropped further on sustained receivings from exporters.
The benchmark six-month premium for September fell to 184-186 paise from 188-190 paise yesterday and far-forward March 2017 contract also dropped to 375-377 paise from 379-381 paise.
Meanwhile, the benchmark Sensex ended higher by 56.82 points or 0.22 per cent to 26,064.12.