Traders said the rupee was trading on a higher note.
The rupee appreciated 13 pais to 73.12 against the US dollar when trade opened on Wednesday, as massive purchases of domestic stocks and the weakness of the US currency in the overseas market strengthened investor sentiment.
In the interbank forex market, the domestic unit opened at 73.16 against the US dollar and edged up to 73.12 against the greenback, posting a 13 paise increase from its previous close.
On Tuesday, the rupee stood at 73.25 against the US dollar.
Traders said the rupee traded on a stronger note against the greenback as the rally in the dollar lost momentum. In addition, REIT flows to domestic stock markets also supported the domestic unit.
Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six currencies, fell 0.13% to 89.98.
The US Dollar Index extended its losses this morning in Asian trade against its major peers, as lower US yields undermined the momentum of its recent rebound and investors cautiously resumed betting on the possibility to start sliding again, ”Reliance Securities said in a research note.
The Euro, British Pound and Japanese Yen were higher against the US Dollar this morning in Asian trading.
On the domestic stock market front, the 30-stock Sensex benchmark BSE traded 168.23 points higher at 49,685.34, and the larger NSE Nifty advanced 64.50 points to 14,627.95.
Foreign institutional investors were net buyers in the capital market as they bought shares worth Rs 571.47 crore on a net basis on Tuesday, according to provisional exchange data.
On the domestic macroeconomic front, lower vegetable prices brought retail inflation down to a 15-month low of 4.59% in December and into the comfort zone of the Reserve Bank.
Industrial production contracted 1.9% in November, entering negative territory after a two-month gap, mainly due to the poor performance of the manufacturing and mining sectors, official data showed on Tuesday.
Futures on Brent, the world’s benchmark for oil, rose 1.34% to $ 57.34 a barrel.