The rupee edged higher to touch the 75.13 mark against the dollar on Monday, gaining by 7 paise - or 0.09 per cent - from its previous close tracking strength in Asian currencies. After opening mildly higher at 75.15 against the dollar compared to its previous close of 75.20, the rupee remained rangebound between 75.13 and 75.20 in the first half of the four-hour session. Gains in domestic equity markets and foreign fund inflows supported the rupee, according to analysts. (Also Read: Why Little Uptick In Rupee Is Expected Despite Multiple Positives)
Domestic stock markets rose more than 1 per cent on Monday amid broad-based gains, tracking global optimism about a recovery from the damage caused by the coronavirus pandemic.
The S&P BSE Sensex rose as much as or 429.87 points to 37,024.20, having started the session up 286.33 points (0.78 per cent) at 36,880.66, and the broader NSE Nifty 50 benchmark climbed to as high as 10,894.05 after registering a gap-up opening just above the 10,850 mark. Gains across sectors - led by financial stocks - pushed the equity markets higher.
International crude oil rates moved lower in early Asian trade as traders eyed a technical meeting of the Organization of the Petroleum Exporting Countries (OPEC) this week, which is expected to recommend an easing in supply cuts that have been propping up crude prices.
Brent crude futures - the global benchmark for crude oil - were last seen trading 0.62 per cent lower at $42.97 per barrel.
The dollar index - which gauges the greenback against six major currencies - was down 0.19 per cent at the time, having declined as much as 0.23 per cent earlier on Monday.
"Overall, emerging market currencies remained stable to positive keeping dollar on a back foot as investors turn optimistic about economic data across the world and US earnings data, despite surging number of cases," said Amit Pabari, managing director at CR Forex, a foreign exchange advisory firm.
While the Japanese yen was last seen trading 0.06 per cent higher, the Singaporean dollar was up 0.22 per cent, the Taiwanese dollar up 0.40 per cent, the Chinese yuan up 0.02 per cent, the Thai baht up 0.24 per cent and the South Korean won up 0.43 per cent.
"The continued optimism on global economic recovery and expectation of vaccine shall limit the negative impact on rupee beyond 76.00, caused by rising number of cases. However, appreciation beyond 74.50 could take few attempts if the Reserve Bank of India remains aggressive in accumulating the dollars," added Mr Pabari, who expects the rupee to trade within a range of 74.50-75.50 against the dollar for few sessions.
At Friday's close of 75.20, the rupee has recovered 2.22 per cent from a record low of 76.91 logged in April, but is still down 5.38 per cent against the dollar so far in 2020, which makes it the worst performing Asian currency.