The rupee was up 23 paise to close at 74.35 provisional against the US dollar on Wednesday, tracking gains in domestic equity markets.
The local unit opened up at 74.54 against the dollar and witnessed an intra-day high of 74.30 and a low of 74.55 on the interbank forex market. It finally settled at 74.35, a rise of 23 paise over its previous close.
In the previous session, the rupee fell 30 paise to close at 74.58 against the US dollar.
The previous day's loss on stronger domestic equities and the weaker dollar index was erased by the rupee. Dilip Parmar, Research Analyst, HDFC Securities, said that the dollar selling on behalf of big corporates added strength in rupee while central bank remains aside from intervening.
Parmar said the market is positioning for better dollar inflows this quarter because of the big bang IPOs plans.
The Dollar index reversed its gains after a fall in US Treasury bond yields ahead of the Federal Open Market Committee FOMC meeting minutes.
The USD INR expected to trade lower in the coming days and could find near term support around 74 before moving to medium-term trend line support of 73.70, while on the higher side 74.70 becomes the resistance, Parmar noted.
On the domestic equity market front, the BSE Sensex ended up at 60,223, or 367.22 points or 0.61 per cent higher. The broader NSE Nifty jumped 120.00 points or 0.67 per cent to 17,925, while the NSE Nifty jumped 120.00 points or 0.67 per cent. The dollar index, which measures the strength of the dollar against the basket of six currencies, fell 0.12 per cent to 96.14.
Brent crude futures, the global oil benchmark, was trading 0.05 per cent higher at USD 80.04 per barrel.
Foreign institutional investors bought shares worth Rs 1,273 on Tuesday, which was net buyers in the capital market. As per stock exchange data, 86 crore were reported.