The Indian rupee appreciated by 25 paise to close at 95.36 against the US dollar on Wednesday, supported by positive domestic equity markets and a weak American currency in the overseas market.
At the interbank foreign exchange market, the rupee opened at 95.47, then touched an intraday high of 95.23 and a low of 95.67 against the US dollar. The local unit finally settled at 95.36, registering a gain of 25 paise over its previous close.
Forex traders said the rupee strengthened amid a weak dollar index, which measures the greenback's strength against a basket of six major currencies. The dollar index was trading lower by 0.15% at 104.85.
Meanwhile, domestic equity markets were trading in positive territory, with the BSE Sensex rising over 300 points and the NSE Nifty gaining around 90 points. This boosted investor sentiment and supported the rupee.
On the macroeconomic front, India's foreign exchange reserves stood at USD 621.5 billion as of May 31, providing a cushion against external shocks. Traders are now awaiting cues from the Reserve Bank of India's monetary policy decision, scheduled for later this week.
The rupee's recovery comes after a period of volatility driven by global factors such as US interest rate expectations and geopolitical tensions. Analysts expect the local unit to remain range-bound in the near term, with support at 95.50 and resistance at 95.00.
