Rupee gains 28 paise to close at 86.36 against dollar

Market participants said that the RBI intervened in the market at around 86.55 level during the first half of the session, which limited the further fall in the local currency.

Weakness of the US dollar overnight supported the rupee on Wednesday.

On Tuesday, the dollar index (DXY), which gauges the greenback’s strength against a basket of six currencies, saw some correction and the 10 year US treasury yield also cooled off from a higher level following below-than-expected US Produce Price Index data. The US PPI advanced to 0.2 per cent in December, against the forecast of 0.4 per cent. A lower PPI reading is negative for the dollar.

The US 10-year treasury yield fell 0.56 per cent to 4.76 per cent.

“The rupee gained strength as the last two days provided much relief after 86.70 zones were tested, trading higher with gains of Rs 0.19 at 86.35 against the dollar. This recovery comes as the dollar index faced profit booking over the last two days, retreating below $108.90 after failing to breach the $110 level, following a strong rally from $107 in the past two weeks,” said Jateen Trivedi, vice president research analyst – Commodity and Currency, LKP Securities.

Forex market experts said that the rupee is likely to remain under pressure.

The rupee’s trading range is expected to lie between 86.20 and 86.80, with participants closely monitoring global dollar movement and domestic market trends for further cues.