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The rupee clawed back lost ground towards the fag-end of the session and settled with a marginal 2 paise gain at 72.97 against the US dollar on Friday, supported by easing crude oil prices.
At the interbank foreign exchange market, the domestic unit opened lower and traded in negative territory most part of the session, tracking a massive sell-off in domestic equities. The rupee touched a low of 73.09 and a high of 72.96 during the day.
The domestic unit finally ended 2 paise higher at 72.97 against the US dollar, marking its fourth straight session of gains.
On Thursday, the rupee had settled at 72.99 against the American currency.
Over the last four sessions, the Indian currency has strengthened by 31 paise against the US dollar.
Brent crude futures, the global oil benchmark, dropped 1.99 per cent to $55.05 per barrel.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, inched up 0.05 per cent to 90.17.
On the domestic equity market front, the BSE Sensex tumbled 746.22 points or 1.50 per cent to end at 48,878.54, while the NSE Nifty fell 218.45 points or 1.5 per cent to 14,371.90.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,614.66 crore on Thursday, according to exchange data.
On a weekly basis, the rupee has gained 10 paise or 0.13 per cent against the greenback.
"The currency market is trading in a very tight range, and there is no volatility to keep it on an edge. Next week is FOMC policy and Fed will keep the easy monetary policy, keeping dollar subdued. The optimism over growth is still high but if there are delays in vaccine rollout then the immediate impact will be some upside in spot.
"RBI is keeping spot near the 73 zone, if that breaks spot will fall to 72.75, while 73.50 will continue to be the resistance," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Sriram Iyer, Senior Research Analyst at Reliance Securities, said the rupee appreciated on Friday and for the second straight week against the US currency, supported by portfolio inflows and a broad dollar decline.
"However, possible intervention from the Reserve Bank of India limited gains in the local unit kept it in a narrow range throughout the week...The local unit strengthened 0.1 per cent this week, adding to last week's 0.2 per cent appreciation," he added.
Foreign investors have invested over $3 billion in Indian equities so far in January, adding to the $8.5 billion in December and almost $10 billion in November, Iyer said.
Meanwhile, regional currencies ended weak on Friday, but remained range bound in a choppy range throughout the week.
Technically, the USD/INR spot pair was unable to sustain above 73.10 levels and ended below 73.00 levels, indicating that bearish momentum will continue up to 72.95-72.80 levels and 73.08-73.15 levels will hold as resistance, Iyer said
Rupee can trade with upward bias
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