Rupee rises for 3rd day, closes at 70.39 vs dollar on oil, domestic markets

The rupee pared early gains but managed to end 5 paise higher at 70.39 against the US dollar on Wednesday on increased selling of the greenback by exporters amid benign crude oil prices and smart gains in domestic equities. 

This is the third straight session of gains for the domestic unit, during which it has rallied by a hefty 151 paise.

Traders said sustained selling of the American currency by exporters and banks ahead of the US Fed policy decision propped up the rupee, while sliding oil prices eased current account deficit concerns.

At the Interbank Foreign Exchange (forex), the rupee opened on a firm note at 70.05.

It gained further to hit a high of 69.86 following dollar selling by exporters, before finally closing at 70.39, up 5 paise.

The rupee Tuesday had rallied by a whopping 112 paise, its best single-day gains in over five years, to settle at 70.44 against the US dollar.

Forex traders said investor sentiment was supported by a sharp fall in bond yields and the continued infusion of liquidity by the RBI by way of open market operation. 

"A bearish view on oil prices added strength to the rupee. On the global front, the market is expecting dovish hike by Fed which is likely to calm investors' nerves in the emerging markets like India," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

Globally, Brent crude, the international oil benchmark, was trading at over a one-year low of $56.27 per barrel.

Market benchmark BSE Sensex settled 137.25 points, or 0.38 per cent, higher at 36,484.33, continuing its rising streak for the seventh session. The NSE Nifty too ended 58.60 points, or 0.54 per cent, higher at 10,967.30.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.1094 and for rupee/euro at 79.8153. The reference rate for rupee/British pound was fixed at 88.7431 and for rupee/100 Japanese yen at 62.38.

Meanwhile, foreign institutional investors (FIIs) bought shares worth Rs 1.4476 billion Tuesday, as per provisional data.