Rupee settles 2 paise higher at 72.92 against US dollar

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.25 per cent to 90.39.

The rupee edged higher by 2 paise to settle at 72.92 (provisional) against the US dollar on Wednesday, ahead of the outcome of the US central bank's meeting.

A customer hands Indian currency notes to an attendant at a fuel station in Mumbai, India. (Reuters)

At the interbank forex market, the rupee opened at 72.91 against the American currency and hit an intra-day high of 72.78 and a low of 72.94 in day trade.

It finally finished at 72.92, higher by 2 paise over its last close.

On Monday, the rupee had settled at 72.94 against the American currency.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.25 per cent to 90.39.

"Indian Rupee appreciated ahead of US Federal Reserve monetary policy meeting. US Federal Reserve is expected to continue with its ultra-lose monetary policy," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Additionally, market participants are careful ahead of the progress on US stimulus package, Mukadam noted.

Further, the rupee gained strength as hopes of global economic recovery from pandemic got a boost after IMF upgraded its Global Economic Outlook for 2021, he said.

However, sharp gain in the local unit was prevented due to a plunge in domestic markets, Mukadam noted.

On the domestic equity market front, the BSE Sensex ended 937.66 points or 1.94 per cent lower at 47,409.93, while the broader NSE Nifty declined 271.40 points or 1.91 per cent to 13,967.50.

Foreign institutional investors were net sellers in the capital market as they offloaded shares worth ₹765.30 crore on a net basis on Monday, according to exchange data.

Forex and equity markets were closed on Tuesday on account of Republic Day.

Brent crude futures, the global oil benchmark, rose 0.61 per cent to USD 56.25 per barrel.