Mumbai: The rupee rose 6 paise to 83.37 against the US dollar in early trade on Wednesday due to sustained foreign capital inflows and strong equity markets.
However, the local unit faced resistance from a stronger US currency and higher crude oil prices overseas, forex traders said.
At the interbank foreign exchange market, the local unit opened stronger at 83.39 and rose to 83.34 against the greenback in early deals. It later traded at 83.37 against the US currency, showing a rise of 6 paise from its previous close.
On Tuesday, the rupee had increased by 12 paise and closed at 83.43 against the US dollar.Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading marginally higher by 0.02 per cent at 104.90.
Analysts said the dollar index initially fell as US data showed retail sales growth was slower than expected, although the currency recovered after May industrial production data topped forecasts.
US Federal Reserve officials have indicated they will continue their dovish stance, dashing hopes of cutting interest rates by December.
Anand James, chief market strategist at Geojit Financial Services, said, "The dollar edged lower against the euro on Tuesday after US retail sales data showed sluggish growth, suggesting the possibility of a Federal Reserve rate cut later this year. "
Brent crude futures, the global oil benchmark, rose 0.02 percent to US$85.35 a barrel.In domestic equity markets, the 30-share BSE Sensex rose 199.63 points or 0.26 per cent to 77,500.77. The broader NSE Nifty rose 25.55 points, or 0.11 per cent, to 23,583.45.
Foreign institutional investors (FIIs) were net buyers in the capital market on Tuesday as they bought shares worth Rs 2,569.40 crore, according to exchange data.
Analysts attributed the strong FII buying to the strong domestic macroeconomic outlook and a sharp decline in US Treasury yields.
Net direct tax collections have increased 21 per cent to over Rs 4.62 lakh crore so far in the current financial year due to higher advance tax payments by corporates, government data showed, reflecting strong economic activity.Fitch Ratings on Tuesday raised India's growth forecast for the current fiscal year to 7.2 percent from 7 percent estimated in March, citing improvement in consumer spending and increase in investment.
However, the local unit faced resistance from a stronger US currency and higher crude oil prices overseas, forex traders said.
At the interbank foreign exchange market, the local unit opened stronger at 83.39 and rose to 83.34 against the greenback in early deals. It later traded at 83.37 against the US currency, showing a rise of 6 paise from its previous close.
On Tuesday, the rupee had increased by 12 paise and closed at 83.43 against the US dollar.Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading marginally higher by 0.02 per cent at 104.90.
Analysts said the dollar index initially fell as US data showed retail sales growth was slower than expected, although the currency recovered after May industrial production data topped forecasts.
US Federal Reserve officials have indicated they will continue their dovish stance, dashing hopes of cutting interest rates by December.
Anand James, chief market strategist at Geojit Financial Services, said, "The dollar edged lower against the euro on Tuesday after US retail sales data showed sluggish growth, suggesting the possibility of a Federal Reserve rate cut later this year. "
Brent crude futures, the global oil benchmark, rose 0.02 percent to US$85.35 a barrel.In domestic equity markets, the 30-share BSE Sensex rose 199.63 points or 0.26 per cent to 77,500.77. The broader NSE Nifty rose 25.55 points, or 0.11 per cent, to 23,583.45.
Foreign institutional investors (FIIs) were net buyers in the capital market on Tuesday as they bought shares worth Rs 2,569.40 crore, according to exchange data.
Analysts attributed the strong FII buying to the strong domestic macroeconomic outlook and a sharp decline in US Treasury yields.
Net direct tax collections have increased 21 per cent to over Rs 4.62 lakh crore so far in the current financial year due to higher advance tax payments by corporates, government data showed, reflecting strong economic activity.Fitch Ratings on Tuesday raised India's growth forecast for the current fiscal year to 7.2 percent from 7 percent estimated in March, citing improvement in consumer spending and increase in investment.
