Indian rupee, the domestic currency, appreciated by 25 paise to 73.43 per US dollar on Wednesday's opening session amid sustained foreign fund inflows and weak American currency.
The domestic unit opened at 73.45 per US dollar at the interbank forex market and gained by 25 paise to touch a high of 73.43 over its previous close.
On Tuesday, the Indian rupee appreciated by 37 paise to close at 73.68 per US dollar, tracking strong domestic equities and sustained foreign fund inflows.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.17 per cent to 91.15.
Foreign portfolio investors (FPIs) bought shares worth Rs 3,242 crore, while domestic institutional investors (DIIs) were net sellers to the tune of Rs 1,043.21 crore in the Indian equity market on 1 December 2020, provisional data showed.
On the domestic equity market front, market indices opened on a bullish note but gave up early gains on Wednesday, tracking mixed cues from global equities, amid profit booking. Sensex was trading 90 points lower at 44,577 and Nifty was falling 14 points at 13,095.
Brent crude futures, the global oil benchmark, was trading 0.76 per cent lower at USD 47.06 per barrel. Oil prices fell as investors awaited the OPEC+ meeting outcome after the producers postponed meeting to January. The OECD lifted its global economic outlook and expects economy to gain pace in coming 2 years.
Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said," An incessant rally in domestic equity indices and slide in greenback towards two and half year lows has paved the way for a sharp appreciation in rupee of around 0.64% towards 74.44 mark, wherein it has breached the crucial barrier of 73.80 mark. More positive news about another promising vaccine candidate which looks set to be rolled out soon and upbeat manufacturing data from China has cheered the street and raised hopes of a swifter recovery. This is leading investors to dump dollar and move towards riskier currencies, despite the warning by the Fed Chair that significant challenges and uncertainties for the US economy still remain. All eyes will now be on the Fed's upcoming meeting, where it is likely to come out with further monetary easing measures to boost the economy, amid no further fiscal support in the last few months. Nonetheless, with the 73.80 mark being taken out, we believe that rupee can witness further strength towards the 73.00-73.10 mark in coming days."
"Record low real rates across the globe are causing the huge amounts of liquidity infused by central banks to chase riskier assets. The Dollar continues to get hammered," said Abhishek Goenka, Founder and CEO of IFA Global. He further noted that safe haven assets such as the US treasuries and the Yen are under performing.
"GST collections came in above the Rs 1 lakh crore mark for the second successive month (November GST collections came in at Rs 1.05 Lakh crs) which is heartening. Bonds are however expected to trade sideways until the RBI monetary policy on Friday," he further noted.