Indian rupee, the domestic currency appreciated by 7 paise to 73.10 per US dollar on Wednesday's opening trade, as positive domestic equities and weak American currency lifted investor sentiment.
The currency unit opened at 73.11 per US dollar at the interbank forex market and inched 7 paise higher to 73.10 over its previous close.
On Tuesday, the rupee had settled at 73.17 against the American currency.
Meanwhile, the dollar index, fell 0.14 per cent to 90.37 against a basket of six currencies.
Reliance Securities said in a research note, "The US Dollar Index is trading marginally lower this Wednesday morning in Asian trade after big spending talk from US Treasury Secretary nominee Janet Yellen. Meanwhile, markets will await the Reserve Bank of India's open market operation on Thursday. The RBI will conduct an outright OMO worth Rs 100 billion on Thursday, in which it will buy the 2024, 2027 papers along with the benchmark bond."
Traders further said the investor focus would be on US President Joe Biden's inauguration ceremony.
All major currency like Singapore dollar, Japanese Yen, Australian dollar were trading higher against the US dollar this Wednesday morning in Asian trade. Markets will also await the announcement of monetary policy decision from European central bank and Bank of Japan, scheduled tomorrow.
On the domestic equity market front, benchmark indices continued trading on a bullish note for the second day on Wednesday, amid mixed global equities. Sensex was rising by 183 point to 49, 569 and Nifty gained by 60 points to 14,581. Sensex and Nifty today touched intraday highs of 49,722 and 14,623.
Foreign portfolio investors (FPIs) bought shares worth Rs 257.55 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 199.30 crore in the Indian equity market on 19 January, provisional data showed. FPI have invested around 17,437 crore in the equity market in January month only. Strong inflow of dollar and good quarter earnings helped domestic currency to move up against the American dollar.
Kshitij Purohit, Product Manager, Currency & Commodities at CapitalVia Global Research said,"All Asian Indices trading in green since strong China's GDP data and sustained inflow of dollar helped emerging market to performed well. Technically, the USDINR Spot open gap up and traded negative throughout the day. It is sustaining below 73.31 levels indicating a negative momentum may continue in the today's session. However, if it breaks the resistance of 73.31 then it may go up toward 73.47. Support is at 73.05-72.90 levels for the spot pair. Resistance for the pair is 73.31. USDINR Jan future will trade in the range of 73.10-73.40 levels."
Brent crude futures rose 0.59 per cent to USD 56.23 per barrel. Oil price moved up along with equities ahead of Joe Biden's inauguration as U.S. President and also on hope for bigger stimulus.