Indian rupee, the local currency appreciated by 6 paise to 73.95 per US dollar on Wednesday's opening session as sustained foreign fund inflows and positive development on the coronavirus vaccine front kept investors optimistic. further, strong opening in domestic equities, sustained foreign fund inflows and weak American currency also supported the domestic currency benchmark.
The local unit opened at 73.98 per US dollar at the interbank forex market and gained by 6 paise over its previous close to touch 73.95 against the greenback. On Tuesday, the rupee settled 10 paise higher at a three-week high of 74.01 per dollar.
Meanwhile, the dollar index, was down 0.16 per cent to 92.08 against a basket of six currencies.
Foreign portfolio investors (FPIs) bought shares worth Rs 4,563.18 crore, while domestic institutional investors (DIIs) were net sellers to the tune of Rs 2,522.11 crore in the Indian equity market on 24 November, provisional data showed.
Trump administration officially began the transition process to President-elect Joe Biden following weeks of delay. Further, positive momentum in the race for a coronavirus vaccine has boosted global markets. Investors now await the FOMC's minutes from its last meeting due later today for clues on the direction of monetary policy. Furthermore, risk appetite increased on news that US President-elect Joe Biden plans to nominate former Federal Reserve Chairwoman Janet Yellen as Treasury Secretary.
"The news of Janet Yellen being president-elect Biden's choice for the post of treasury secretary further buoyed risk sentiment. Appointment of Yellen as treasury secretary is believed to result in greater cohesion between monetary and fiscal policies," said Abhishek Goenka, Founder and CEO, IFA Global.
Goenka further said today is the November exchange traded currency derivatives expiry. There could be some selling on account of this.
On the domestic equity market front, market indices reversed trend after 3 days of consecutive gains amid profit booking. After hitting record highs today, Sensex was trading 198 points lower at 44,235 and Nifty fell by 48 points to 13,007.
Crude oil prices were also trading 1% higher in the morning of Asia trading hours. Oil price rose on the back of news of another vaccine being found effective against covid-19 giving hope for a speedy demand recovery. The international benchmark Brent crude futures was up 1.09% to $48.27 per barrel.