Mumbai, March 5 The rupee rebounded from its lowest level and closed with a gain of 45 paise at 91.60 (provisional) against the US dollar on Thursday, driven by buying trends in domestic equity markets and reports of Reserve Bank intervention.
According to forex analysts, the Reserve Bank seems to have intervened to stabilize the local currency due to uncertainties surrounding the ongoing conflict involving the US, Israel, and Iran.
However, a strong dollar, rising crude oil prices, and intense withdrawal of foreign funds kept the rupee under pressure, they said.
At the interbank foreign exchange market, the rupee opened at 92.16 and touched an intraday high of 91.30 against the US dollar. The currency closed the session at 91.60 (provisional) against the dollar, registering a gain of 45 paise from the previous closing level.
The Indian currency plunged 56 paise to close at its all-time low of 92.05 against the US dollar on Wednesday, after logging a steep loss of 41 paise on Monday. The forex market was closed on Tuesday due to Holi.
Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said the rupee rebounded from record low levels due to reports of intervention by the Reserve Bank of India and a positive tone in the domestic markets. However, a strong dollar and a surge in crude oil prices limited sharp gains.
"Outflows from foreign investors and rising crude oil prices may also weigh on the rupee. However, any intervention by the RBI may support the rupee at lower levels. Traders may also take cues from weekly unemployment claims data from the US. The USD-INR spot price is expected to trade in a range of Rs 91.30 to Rs 92.10," Choudhary added.
Meanwhile, the dollar index, which gauges the strength of the US dollar against a basket of six currencies, was trading 0.13 per cent higher at 98.86.
Brent crude, the global oil benchmark, was up 1.83 per cent at $82.89 per barrel in futures trade, after escalating threats of disruptions in the flow of crude through the Strait of Hormuz.
The military conflict involving the US, Israel, and Iran continued on Thursday as Iranian missiles hit Israel after an American submarine sank an Iranian warship on Wednesday. Iran has also threatened to destroy military and economic infrastructure across the region.
Experts say India faces the risk of a sharp increase in its import bill due to rising crude prices in the international market, as the country's 85 per cent fuel requirement is met through imports.
On the domestic equity market front, the Sensex saw a sharp recovery of 899.71 points or 1.14 per cent to settle at 80,015.90, while Nifty recovered 285.40 points or 1.17 per cent to 24,765.90.
Foreign institutional investors sold equities worth Rs 8,752.65 crore on a net basis on Wednesday, according to exchange data.
