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Rupee rises 14 paise against U.S. dollar in early trade

Forex dealers said a weak dollar overseas and persistent foreign fund inflows also supported the local unit.

The rupee appreciated by 14 paise to 73.94 against the U.S. dollar in opening trade on Monday, tracking a massive rally in domestic equity markets after Joe Biden was declared as the winner of the U.S. presidential election.

Forex dealers said a weak dollar overseas and persistent foreign fund inflows also supported the local unit.

At the interbank forex market, the domestic unit opened strong at 73.95 against the U.S. dollar, then gained a little more to 73.94, registering a rise of 14 paise over its previous close.

In the previous session, the rupee had gained 28 paise to end at 74.08 against the U.S. dollar.

On the equity front, after touching its lifetime peak of 42,566.34 in the opening session, the BSE Sensex was trading 627.21 points or 1.50 % higher at 42,520.27.

The broader NSE Nifty too claimed a fresh high of 12,451.80. Later, it was trading with 178 points or 1.45 % gain at 12,441.55.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, dipped 0.06 % to 92.16.

The greenback weakened against its major rival currencies, as investors started eyeing riskier assets after Biden’s victory.

“Joe Biden has won the U.S. presidential election. Under a Democrat President and a Republican Senate scenario, few would have expected this kind of a risk rally. However, the markets are perhaps viewing a Biden win as restoring stability and reducing uncertainty on various domestic and foreign policy issues,” Abhishek Goenka, Founder and CEO, IFA Global, said.

Though the second U.S. fiscal stimulus package may not be as magnanimous given Republican control of Senate, the U.S. economy has been recovering well, with most economic data beating expectations, he added.

“U.S. dollar index fell this early Monday morning trade as investors heralded Joe Biden’s election as U.S. president by buying trade-exposed currencies on expectations that a calmer White House could boost world commerce and that monetary policy will remain easy,” Reliance Securities said in a report.

Foreign institutional investors remained net buyers in the capital market as they purchased shares worth Rs 4,869.87 crore on Friday, according to provisional exchange data.

Meanwhile, Brent crude futures, the global oil benchmark, rose 2.71 % to USD 40.52 per barrel.

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