Mumbai: The rupee snapped a two-day fall to strengthen on Monday, as a rise in local shares raised expectations of a return of portfolio inflows and a weaker dollar triggered buying in the local currency from exporters.
The partially convertible rupee ended at 46.21/22 per dollar, off an intraday high of 46.06 and about 0.2% stronger than Friday’s close of 46.30/31.
The BSE benchmark Sensex ended 0.3% higher, after rising as much as 1.4% in early deals.
Foreign investments in local shares is a key driver of the rupee.
“The Sensex movement and euro’s rise were the two main factors driving the rupee up. The rupee eased from the day’s high tracking the correction in the share market,” said a senior trader with a foreign bank.
“The rupee should trade in the 46.15-46.35 range against the dollar tomorrow,” he added.
The dollar fell as investors pulled back expectations of an earlier-than-expected rate hike by the US Federal Reserve, which triggered some rise in risk appetite.
The index of the dollar against six majors was down 0.1%.
One-month offshore non-deliverable forward contracts were quoting at 4.21/27, little changed from the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both quoted at 46.23.