Indian rupee, the currency benchmark, opened on a flat note and was trading in a narrow range at 74.12 per dollar on Monday's opening session as rising COVID-19 cases offset positive sentiments surrounding the progress on the vaccine front.
The domestic unit opened at 74.12 per US dollar at the interbank forex market, after touching 74.17 per American currency in early trade.
On Friday, the Indian rupee appreciated by 11 paise to settle at 74.16 per US dollar.
The dollar index, was down 0.13 per cent to 92.26 against a basket of six currencies.
Expressing views on the currency, Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said," The rupee is currently drawing a lot of support from equity inflows and the fact that the dollar globally is on the backfoot. Going forward, we think that the rupee has scope to further appreciate till 73.80. However, beyond that, the RBI would step in to curtail its move, while the dollar index may also rebound given the uncertain growth outlook in the U.S. That should put some downward pressure on the rupee. The domestic unit is expected to trade in the 73.80 to 75 band till the end of this month."
"The overall sentiment prevailing globally can be best described as one of cautious optimism. With a couple of vaccines having been proven effective in trials, the question now is how much the situation gets worse before it becomes better and how much more damage is inflicted upon the economy until then," said Abhishek Goenka, Founder and CEO, IFA Global.
On the domestic equity market front, market indices hit record highs on Monday and traded bullish, amid largely positive cues from global markets and sustained foreign fund inflows. After touching lifetime intra-day highs, Sensex was trading 90 points higher at 43,974 and Nifty was 33 points higher at 12,893.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,860.78 crore on a net basis on Friday, according to exchange data.
Brent crude futures, the global oil benchmark, rose 0.47 per cent to USD 45.17 per barrel. Oil price gained on Friday supported by news on covid-19 vaccine development but fears of more lockdown restrictions capped gains.