USD/INR closed at 71.5525 against its previous day closing of 71.56. Dollar traded up during afternoon trades on buying by public banks mostly on behalf of oil importers. Indian Rupee was trading little changed against US dollar as many Asian markets remained shut for the Lunar New Year. Traders are cautious ahead of the key Reserve Bank of India meeting on Thursday. A majority of bank treasury heads surveyed by Mint expects RBI to announce a status-quo policy, while changing the policy stance from calibrated tightening to neutral. However, some bankers are not ruling out a 25 basis points (bps) cut before the upcoming general election. Falling inflation, along with an expansionary budget, could push the RBI to maintain the policy rates unchanged, said a section of bankers.
The greenback surged against its major peers as market participants await the US President Donald Trump's State of the Union address tonight.Trump is expected to call on Congress to come together on infrastructure projects and his trade deal with Canada and Mexico. Trump's speech is likely to provide clues about what could be in store with regard to the conflict over funding for the border wall.
Crude oil futures remained subdued as concerns regarding energy demand resurfaced after data showed a drop in US services sector activity. Oil prices moved higher during earlier session as traders stepped up buying, on hopes OPEC-led supply cuts and US sanctions against Venezuela's petroleum industry will significantly tighten supply in the market.
Sensex provisionally ends 385 points higher with 26 components in the green.