Indian rupee, the domestic currency benchmark fell by 24 paise to 73.48 per US dollar on Monday's opening trade, tracking a rebound in the American currency even as domestic equities were trading with significant gains. Weak Asian currencies also continued to weigh on investor sentiment.
The domestic unit opened at 73.47 against the US dollar at the interbank forex market and fell by 24 paise to 73.48 against the greenback over its previous close.
On Friday, the rupee had settled at 73.24 against the American currency.
Meanwhile, the dollar index, rose 0.37 per cent to 90.43 against a basket of six currencies.
Reliance Securities said in a research note,"The US dollar index has started with a gap up trade this Monday morning in Asian trade as sharp gains in US yields and hopes for more stimulus to boost the world's largest economy prompted some investors to temper bearish bets, pulling the currency further away from recent multi-year lows. Moreover, President-elect Joe Biden who takes office this month, with Democrats able to control both houses of Congress, has promised "trillions" in extra pandemic-relief spending."
On the domestic equity market front, market indices traded on a bullish note on Monday, amid positive global equities. Sensex was rising 407 points higher at 49,190 and Nifty gained by 104 points to 14,451. In today's session, Sensex and Nifty have hit new lifetime highs of 49,260 and 14, 474, respectively.
Foreign portfolio investors (FPIs) bought shares worth Rs 6,029.83 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 2,372.54 crore in the Indian equity market on 8 January, provisional data showed.
Brent Crude futures, the global oil benchmark, declined 1.16 per cent to USD 55.34 per barrel. Oil price eased on renewed concerns about fuel demand as lockdown restrictions in Europe and China is being strictly imposed due to rising coronavirus cases.
Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said," We are witnessing a reversal in the dollar index, while political stability in the U.S. and the probability of a further fiscal stimulus package has pushed the long-term U.S. yields higher. Moreover, there is a possibility that the Fed may reduce its bond buying plan towards the end of this year, which could further push U.S. yields higher and consequently hurt the rupee. Back home, with RBI mopping up dollar inflows, the local currency can test 73.80 to 74 levels in the coming sessions.
We expect the rupee to trade in a broad range of 73 to 74.20 levels for the rest of this month."