The rupee rose by 18 paise - 0.24 per cent - to 74.73 against the US dollar on Tuesday. It traded in a range of nine paise between 74.73 and 74.82 against the greenback, having started the day stronger at 74.79 compared to its previous close of 74.91. Gains in domestic equity markets, which extended a rally to the fifth trading session in a row, and weakness in the American currency overseas supported the rupee, according to analysts. (Also Read: Analysts Expect Rupee To Stay Near 74 In Near Term)
Domestic stock market benchmarks Sensex and Nifty each rose more than 1 per cent, led by automaker and energy stocks, as hopes for a COVID-19 vaccine and strong earnings momentum eclipsed fears over surging domestic cases. The Sensex jumped as much as 504.39 points to 37,923.38 and the Nifty benchmark climbed to as high as 11,164.45 - both their strongest intraday levels recorded since March 5.
The dollar index - which measures the greenback against six currencies - fell as much as 0.21 per cent on Tuesday.
Other Asian currencies were mixed. While the Japanese yen was last seen trading 0.08 per cent lower against the US dollar, the Singaporean dollar and the Chinese yuan were down 0.10 per cent each, and the Thai baht, the South Korean won and the Taiwanese dollar were up 0.35 per cent, 0.46 per cent and 0.19 per cent respectively.
Analysts expect the rupee to stay close to the current levels in the near term.
"In the recent days, the bias for the rupee has turned towards appreciation as the (USD-INR) pair remains well supported by persistent inflows and sentiments turning positive amid the hopes of a vaccine... It is likely that the pair could move near 74.50 levels in the next few sessions, which if taken out, will be an indication to trend change," said Amit Pabari, managing director at CR Forex Advisors, a forex advisory firm.
"However, if the Reserve Bank of India intervenes as last time, the pair is likely to bounce back near the 75.00 territory. Overall, if the range of 74.50-75.50 is broken, we could see sharp moves in the rupee," he added.
At Monday's close, the rupee has recovered 2.46 per cent from a record low of 76.91 logged in April, but is still down 5.13 per cent against the US currency so far in 2020.