Rupee rises 13 paise to settle at 94.71 against US dollar

The rupee settled 13 paise higher at 94.71 (provisional) against the US dollar on Tuesday, supported by inflow of foreign funds amid massive buying in domestic equity markets.

However, a recovery in crucial oil prices due to geopolitical uncertainties capped gains in the Indian currency, according to forex traders.

At the interbank foreign exchange market, the rupee opened at 94.68 and touched the day's high of 94.60 against the greenback. The unit pared some gains before settling 13 paise higher at 94.71 (provisional) against the US dollar.

The Indian currency fell 8 paise to close at 94.84 against the dollar on Monday, after appreciating 50 paise in the preceding session on Friday.

Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan, said the rupee gained on a surge in domestic markets and a soft dollar. However, a recovery in crude oil prices capped sharp gains.

"We expect the rupee to trade with a positive bias on strength in domestic markets amid expectations of changes in LTCG. Fresh weakness in the dollar and fresh foreign inflows may also support the rupee. However, tensions between Ukraine and Russia and attacks in the Middle East may cap sharp upside. Traders may take cues from ISM manufacturing PMI data from the US. USD-INR spot price is expected to trade in the range of Rs 94.40 to Rs 95," Choudhary said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.69, higher by 0.07 per cent.

Brent crude, the global oil benchmark, was trading higher by 0.86 per cent at USD 105.67 per barrel in futures trade.

Analysts said crude oil prices rebounded after reports that the US conducted fresh strikes on some Iranian targets in the Strait of Hormuz, triggered concerns over global trade disruptions. According to a US official, the strike was carried out after Iranian surface-to-air missiles targeted some American assets.

On the domestic equity market front, Sensex surged 1,225.07 points or 1.62 per cent to settle at 76,917.85, while the Nifty climbed 370.05 points or 1.58 per cent to 23,810.85.

Foreign Institutional Investors (FIIs) remained net buyers for the second consecutive day on Monday and purchased equities worth Rs 3,114.68 crore on a net basis, according to exchange data.