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Indian Rupee on Monday hit a fresh four-month high to strengthen past 73-mark against the US dollar after the government approved emergency use of Serum and Bharat Biotech covid vaccines.

Gains were also after continued inflows by foreign investors in local equities and debt markets and weakness in dollar index amid worries of global growth recovery on rising infections.

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In intraday, the local unit opened at 72.93 and hit a high of 72.90 a dollar -- a level last seen on 2 September. At closing, the currency settled at 73.02 a dollar, up 0.14% from previous close. The Rupee has gained seven out of eight sessions and advanced 1.2% in this period.

On Sunday, the controller general of India authorised the emergency use of Serum Institutes Covershield and Bharat Biotech's Covexin vaccines clearing the way for millions of health workers and other vulnerable groups to start receiving their first shots in the next few days.

Foreign buying in local stocks after recent better than expected macro-economic data. GST revenue collection data for December month which recorded at an all-time high since implementation of GST and India's current account stayed surplus for a third straight quarter helped by a narrower trade gap, indicating recovery in the economy.

Since 1 October, foreign investors have pumped nearly $20 billion in equities and $700 million in debt.

"We expect the positive domestic data to prevail and keep the risk sentiment upbeat onshore", said IFA Global Research in a note to its investors.

"The RBI is likely to continue absorbing flows and the intensity of intervention would depend on how the broad dollar behaves", the IFA Global note added. IFA Global note believes that the rupee is likely to trade in a 72.90-73.24 range.

According to Anindya Banerjee analyst from Kotak Securities the year 2020 has been a year where RBI played an extremely important role in keeping volatility in check.

"They sold aggressively when USD rose in value during Covid panic of March-April. Then they bought close to 100 billion dollars, to prevent Rupee from appreciating, when inflows gushed to Indian capital markets", Banerjee said. He expects, in 2021, if the global trend of dollar remains downward, then Rupee can decline towards 70 levels.

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