The partially convertible rupee, which opened at 74.02 versus the US dollar as against the previous close of 74.03, was last at 73.94. The Indian currency moved in a band of 73.92-74.03 per US dollar so far in the day.
The dollar index, which measures the US currency against six major rival currencies, was last at 95.86 as against 95.99 on Monday.
The dollar has weakened globally after data released Friday showed that the US economy added far fewer jobs in December than estimated by analysts.
The data showed that the US economy saw 199,000 jobs additions in December well short of expectations of around 400,000.
The disappointing figures weakened the case for the US Fed to adopt a faster approach to normalizing monetary policy, dealers said.
In a statement to the US Senate Banking Committee, Fed Chair Jerome Powell said the central bank would prevent inflation from becoming entrenched in the world’s largest economy.
In its December policy statement, the Fed had announced an end to pandemic-era asset purchases while signaling three rate hikes of 25 basis points each in 2022.
Higher US interest rates typically blunt the appeal of assets in riskier emerging markets such as India and lead to outflows of overseas investment.
The rupee, however, has shown extraordinary resilience against the US dollar since the Fed’s statement in mid-December, gaining more than 2 per cent since December 20, as the RBI’s decision to expend its considerable foreign reserves has discouraged speculation against the Indian unit.
“Rupee has risen above 74 with an opening around 73.95 and flows continue to take rupee higher as importers are absent from the market as is RBI. FED may be in for a rate hike but that has overall not affected USDINR,” Anil Kumar Bhansali, Head, Treasury at Finrex Treasury Advisors said.
“Importers to continue buying and exporters to continue to hold their exporters for an upmove to 75,” he said.
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