Mumbai, February 10 The rupee reversed initial losses and ended on a positive note on Tuesday, gaining 9 paise to close at 90.57 (provisional) against the US dollar, supported by positive cues from domestic equities and a weakening of the American currency in the overseas market.
Forex traders said the rupee is experiencing sideways price action as the support from positive domestic equities and foreign fund inflows was offset by geopolitical tensions and demand for the dollar from importers.
At the interbank foreign exchange market, the rupee opened at 90.63 against the US dollar, then lost some ground to touch an intraday low of 90.77 and a high of 90.48 against the greenback.
At the end of Tuesday's trading session, the rupee was quoted at 90.57 (provisional), registering a gain of 9 paise over its previous close.
On Monday, the rupee witnessed volatile trading and ended the day on a slightly lower note, down 1 paisa at 90.66 against the US dollar.
"We expect the rupee to trade with a slight positive bias due to strength in the domestic markets and optimism about trade deals. A weaker dollar and fresh foreign inflows may further support the rupee.
"However, geopolitical tensions and demand for the dollar from importers may limit any sharp upside. Traders may remain cautious ahead of the non-farm payrolls report on Wednesday. The USD/INR spot price is expected to trade in a range of 90.30 to 90.80," Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said.
Meanwhile, the dollar index, which gauges the strength of the greenback against a basket of six currencies, was trading 0.01 per cent higher at 96.82.
The dollar index has fallen below the 97 level amid ongoing weakness and a shift away from dollar assets. Chinese regulators have urged banks to reduce their exposure to US Treasury bonds due to policy risks in the US.
Brent crude, the global oil benchmark, was trading 0.16 per cent lower at USD 68.93 per barrel in futures trade.
On the domestic equity market front, the Sensex climbed 208.17 points to close at 84,273.92, while the Nifty was up 67.85 points at 25,935.15.
On Monday, foreign institutional investors purchased equities worth Rs 2,254.64 crore, according to exchange data.