Rupee appreciates further, gains 6 paise to 69.65 against US dollar

Extending its gains, the rupee on Wednesday appreciated by 6 paise to 69.65 in the early trade, driven by sustained buying by overseas investors. 

The domestic unit strengthened below the 70-a-dollar mark to end at 69.71 on Tuesday. It is building up a buffer for the central bank to operate in, should there be volatility in the markets in the run-up to the Lok Sabha elections.

Keeping the rupee slightly stronger aids the central bank in supplying dollars and stabilise the currency, if there is a selling pressure threatening to erode the value of the rupee rapidly, PTI reported quoting currency dealers.

Foreign Institutional Investors (FIIs) bought shares worth Rs 2,477.72 crore in the equity market on Tuesday, NSE data showed.

On the macro front, industrial output growth slipped in January to a two-month low of 1.7 per cent, while the retail price inflation rate rose to a four-month high of 2.57 per cent in February, official data showed.

"Today, USD/INR pair is expected to quote in the range of 69.50 and 70.20," said Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services. 

On the global front, Asian shares were mostly trading lower in the early trade on Wednesday after  UK lawmakers once again rejected Prime Minister Theresa May's Brexit deal. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.4 per cent while Japan’s Nikkei slipped 1.3 per cent. 

US stocks ended largely higher on tame inflation data in the overnight trade. 

In the commodity market, oil prices edged higher.