Rupee rises by 2 paise to 72.94 per US dollar in early trade

The rupee opened on a flat note and edged higher by 2 paise to 72.94 per dollar on Wednesday's opening trade, amid positive domestic equity market and FII inflows. Traders remained cautious ahead of Reserve Bank of India (RBI) monetary policy outcome to be announced on Friday.

The domestic unit opened flat at 72.96 against the US dollar at the interbank forex market and inched higher to 72.94 against the greenback, rising mere 2 paise over its previous close.

Meanwhile, the dollar index, fell 0.16 per cent to 91.05 against a basket of six currencies.

Abhishek Goenka, Founder and CEO, IFA Global said," Rather than the higher than expected gross borrowing figure for FY22, bond markets seem to have been spooked more on account of slower than expected return on the path of fiscal consolidation," Goenka further added that even comforting statements from rating agency S&P about the budget not having any material impact on India's credit factors were not enough to soothe the markets. The RBI so far has refrained from announcing an OMO and that is adding to nervousness."

On the domestic equity market front, Market indices touched new record highs on Wednesday's early session, amid positive global equities. Extending gains for third session after Union Budget 2021, Sensex was trading 550 points higher at 50,345 and Nifty gained 177 points to 14,825. Both the barometers hit lifetime highs of 50337 and 14,828 during today's session.

Foreign portfolio investors (FPIs) bought shares worth Rs 6,181.56 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 2,035.20 crore in the Indian equity market on 2 February, provisional data showed.

Brent crude futures, rose 0.45 per cent to USD 57.72 per barrel. Oil price jumped to the highest level in a year after producers showed that they are sticking to the committed output cuts.

Kshitij Purohit, Product Manager, Currency & Commodities at CapitalVia Global Research said," FII bought 6181 CR into domestic equity market after the growth-oriented budget, FII keep pumping money into system helping local currency to edge higher against dollar. The U.S. Dollar Index is at 91.03 against currency basket, It trading above 50 Day SMA and likely to go towards 100 days SMA showing bullish momentum. Asian Equity market trading flat on the morning.

He added," Technically, USDINR Feb Future closed at 73.22. It is expected to trade with bullish momentum for the day, Spot pair took support of 72.80 and come up, it took resistance of 21 days SMA placed at 73.08 and closed below it. It is expected to open near 72.95, strong dollar index, flat equity market will help dollar to go up side. Local banks are defending 72.80 levels very strongly."

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