The rupee rose by 3 paise to settle at 72.94 (provisional) against the US dollar on Monday, extending its gains for the fifth straight session despite heavy selling in domestic equity market. At the inter-bank Forex market, the rupee opened at 72.95 against the American currency and hit an intraday high of 72.89 and a low of 72.96 in day trade. It finally finished at 72.94, higher by 3 paise over its last close. On Friday, the rupee had settled at 72.97 against the American currency. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies advanced 0.10 percent to 90.32. The rupee has managed to hold its fort around the 72.90 to 73 levels, but given the sell-off in equities and the likelihood of a rebound in the dollar index, we see the trend tilting slightly towards depreciation going forward.

The rupee rose by 3 paise results in :

Appreciation of rupee

The correct answer is option (2) : Appreciation of rupee

When a currency appreciates, it increases in value relative to other currencies. For example, if the rupee rises from 72.97 to 72.94 against the US dollar, it means you need fewer rupees to buy one US dollar. This is a sign of strength or improvement in the rupee's value.