Mumbai: The Indian rupee recovered from the day's lows and settled higher by 20 paise at 70.87 to the US dollar on Thursday, helped by weakening of the greenback overseas and easing crude oil prices.
However, sustained foreign fund outflows and sell-offs in domestic equities put pressure on the forex market, somewhat capping the rupee gains.
At the interbank foreign exchange market, the rupee opened weaker at 71.22 a dollar. It fell further to the day's low of 71.35, before recouping losses to touch a high of 70.86.
The local unit finally settled at 70.87, up 20 paise against its previous close.
The Indian rupee on Tuesday had closed at 71.07 against the US dollar.
Forex market was closed on Wednesday on account of Mahatma Gandhi Jayanti.
"Indian rupee has recovered from morning lows of 71.35 a dollar and last quoted at 70.93 a dollar with the gain of 15 paise amid foreign fund flows in Primary market and lower dollar index," said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.
Sharma further noted that "ongoing IPO, IRCTC has received good response from Institutions. Asian currencies are trading higher following weaker economic data".
The initial public offering of Indian Railway Catering and Tourism Corporation (IRCTC) was subscribed 77.91 times so far on the final day of bidding on Thursday.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 810.72 crore on Thursday, exchange data showed.
Brent futures, the global oil benchmark, dropped 0.28 per cent to USD 57.53 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.07 per cent to 98.95.
The 10-year government bond yield was at 6.61 per cent on Thursday.
"India's bonds advance for a third day amid bets the central bank will cut interest rates when it meets Friday. A decline in U S Treasury yields is also supporting sentiment," Sharma said.
Experts believe the Reserve Bank of India is likely to go for yet another rate cut at the fourth bi-monthly monetary policy for 2019-20 on Friday.
On the domestic market front, the 30-share BSE Sensex swung between a high of 38,310.93 and a low of 37,957.56, before settling at 38,106.87, showing a decline of 198.54 points or 0.52 per cent. Likewise, the 50-share NSE Nifty closed down by 46.80 points or 0.41 per cent at 11,313.10.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.9109 and for rupee/euro at 77.1752. The reference rate for rupee/British pound was fixed at 87.0554 and for rupee/100 Japanese yen at 65.49.
