The Indian rupee staged a modest recovery from its fresh 2016 low and ended 11 paise higher at 68.65 against the US currency, largely helped by some dollar selling from banks and exporters. Frantic out-bound foreign capital on expectations of President-elect Donald Trump’s higher spending policies and concerns over the recent demonetisation drive had dragged the rupee down to test fresh 2016 lows on Monday.
An extremely bullish dollar overseas against the backdrop of an imminent Fed rate hike in the near term, however, kept sentiment shaky. The local unit has been witnessing turmoil against the dollar ever since the beginning of this year.
Adequate dollar supplies following suspected RBI intervention through state-owned banks mainly aided the recovery, a forex dealer said.
At the Interbank Foreign Exchange (forex) market, the home currency resumed marginally higher at 68.73, from the overnight closing level of 68.76.
It later moved in a narrow range of 68.62 and 68.78 before settling at 68.65, a gain of 11 paise, or 0.16 per cent.
The rupee on Monday had tumbled as much as 30 paise to end at 68.76.
In worldwide trade, the greenback edged higher against other majors currencies ahead of US GDP data outcome later in the day amid sustained hopes for a December rate hike.
The US dollar index was quoted higher at 101.49 in late afternoon.
Meanwhile, RBI on Tuesday fixed the reference rate for the dollar at 68.65 and euro at 72.80.
In cross-currency trades, the rupee fell against the pound sterling to close at 85.59, from 85.26.
But it recovered smartly against the euro to settle at 72.76 compared with 72.92 and also bounced back against the Japanese yen to close at 60.96 from 61.22 per 100 yens earlier.
In the forward market, premium for dollar softened on the back of fresh receivings from exporters.
The benchmark six-month premium for April eased to 101.5-104 paise from 103-105 paise and the far-forward October 2017 contract also moved down to 248-251 paise from 251-253 paise on Monday.
On the equity front, bourses continued their uptrend for the third straight session on the back of value-buying along with some short-covering.
The benchmark Sensex gained over 43 points to end at 26,394.01 while the broader Nifty moved up 15.25 points to 8,142.15.
In global trade, crude prices crashed over 2 per cent ahead of Wednesday’s much-anticipated meeting among OPEC members amid concerns that leading oil exporters were struggling to reach a deal to cut production to reduce global oversupply.