The rupee edged higher to 79.93 against the US dollar on Wednesday, a day after hitting the 80 mark for the first time ever, as an easing greenback, cooling off oil prices and strength in domestic equities supported the currency.

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The rupee had settled at 79.94 against the US dollar in the previous session.

The dollar index — which gauges strength in the greenback against six peers — dropped 0.2 percent to 106.4 on Wednesday.

Analysts say the rupee may not revisit the dreaded 80 level against the dollar anytime soon as the US currency retreats from two-decade highs.

The government on Wednesday announced cut in windfall tax on crude, petrol, diesel and jet fuel. Analysts also say the move is likely to support exports as well as the rupee.

Manoj Kumar Jain, Head-Commodity and Currency Research at Prithvi Finmart, expects the rupee to remain volatile this week and hold its key support level at 80.55.

Global oil prices edged lower on Wednesday ahead of an expected buildup in US crude inventories amid falling demand. Brent futures fell as much as 3.4 percent to $103.6 a barrel. West Texas Intermediate (WTI) futures followed suit, down 0.9 percent at $99.8 a barrel.

Meanwhile, a decline in selling of Indian shares by foreign institutional investors — which are in a tenth month of offloading shares — is also likely to provide a cushion for the currency.

Domestic equity benchmarks Sensex and Nifty50 were on track to finish higher for a fourth straight session.

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First Published:Jul 20, 2022 10:10 AM IST