Mumbai, Nov 24 (PTI) The rupee appreciated by 23 paise to close at 81.70 against the US dollar on Thursday as a weak greenback in the overseas market and a rally in domestic equities boosted investor sentiment.
Forex traders said the dollar fell in international trade post the weak US data and dovish Fed minutes.
At the interbank foreign exchange market, the local unit opened at 81.72 and touched an intra-day high of 81.60 and a low of 81.77 against the greenback.
The local unit finally settled at 81.70, registering a rise of 23 paise over its previous close of 81.93.
"Rupee continued to trade in a narrow range and volatility remained low in the past few sessions. Euro and pound are trading higher after the Fed maintained a less hawkish stance in its meeting minutes released on Wednesday," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Some committee members expressed concern about risks to the financial system should the Fed continue to press forward at the same aggressive pace, Somaiya said.
He further noted that volatility for the dollar could remain low as the US markets remain shut on account of the Thanksgiving day holiday. "The Indian rupee settled higher on Thursday as the dollar index weakened after less-hawkish Fed minutes. The rupee also support tracking gains in the Asian peers as risk sentiment improved in the region," Sriram Iyer, Senior Research Analyst at Reliance Securities said.
However, appreciation in the rupee was capped as importers seem to be active in the markets, he added.
Moreover the US markets are shut over the next two sessions and markets could remain extremely range bound with low volumes.
India's bond yields ended lower on Thursday after minutes of the US Federal Reserve's November meeting signalled a slower pace of rate hikes moving forward.
During the day, yields moved in a narrow range as traders adjusted their positions ahead of the weekly debt auction on Friday.
The benchmark 10-year government bond yield ended at 7.255% versus its close of 7.291% on Wednesday.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.19 per cent to 105.87.
Global oil benchmark Brent crude futures declined 0.32 per cent to USD 85.14 per barrel.
On the domestic equity market front, the 30-share BSE Sensex advanced 762.10 points or 1.24 per cent to end at 62,272.68, while the broader NSE Nifty gained 216.85 points or 1.19 per cent to 18,484.10.
Foreign institutional investors (FIIs) were net buyers in the capital markets on Thursday as they purchased shares worth Rs 1,231.98 crore, according to exchange data. PTI DRR MR MR