The rupee bounced back sharply by 75 paise to close at 88.06 (provisional) against the US dollar on Wednesday, posting its biggest intraday gain in nearly four months, due to likely intervention by the RBI and a surge in the domestic markets.
Forex traders said domestic markets surged nearly 0.70 per cent on optimism over trade talks between India and the US, which reflected in the USD/INR pair.
Moreover, a weak US Dollar and an overnight decline in crude oil prices also supported the rupee.
At the interbank foreign exchange, the rupee opened at 88.74 against the greenback, and fell below the 88-mark during the session, touching a high of 87.93 per dollar. The domestic unit finally settled at 88.06 against the greenback, registering a rise of 75 paise over its previous close.
On Tuesday, the rupee depreciated by 13 paise to close at an all-time low of 88.81 against the US dollar.
"We expect the rupee to trade with a positive bias on overall weakness in the US dollar and underlying strength in the domestic markets. Broad weakness in global crude oil prices and fresh foreign inflows may also support the rupee. USD/INR spot price is expected to trade in a range of 87.70 to 88.40," said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.22 per cent lower at 98.82.
Brent crude, the global oil benchmark, was trading 0.19 per cent lower at USD 62.27 per barrel in futures trade.
On the domestic equity market front, Sensex jumped 575.45 points to settle at 82,605.43, while Nifty surged 178.05 points to 25,323.55.
Foreign Institutional Investors sold equities worth Rs 1,508.53 crore on Tuesday, according to exchange data.
Meanwhile, India's exports grew by 6.74 per cent to USD 36.38 billion in September despite global headwinds. Imports jumped 16.6 per cent to USD 68.53 billion.
The country's trade deficit stood at USD 32.1 billion during the month, according to the commerce ministry data.
Source Name : Economic Times