Snapping a five-day fall, the rupee ended higher at 54.56 against the dollar due to dollar selling by a power sector firm and stronger domestic equity markets.
In addition, the euro hit a seven- and-a-half month peak against the dollar boosting the rupee sentiments.
The Indian unit had opened marginally lower at 54.90 from Tuesday’s close of 54.86 before taking cues from the overseas markets. Intra-day, it moved in the range of 54.51 and 54.92 per dollar.
“The rupee gains are largely due to domestic inflows. Further, investors will wait to get cues from the decision on US ‘fiscal cliff’ crisis,” said Bitupan Majumdar, Head, FX Derivatives, JRG Wealth Management.
On Tuesday, the rupee had breached the 55-level mark and touched a low of 55.05. However, a strong euro helped the rupee to recover some of its losses towards the end of the day.
Further, dollar demand from importers and banks for oil and defence related purchases will keep the Indian currency under pressure.
The rupee is likely to be range-bound and will trade around 54 and 55 levels. this trend will continue till December end, Majumdar said.
Call rates, G-Secs
The inter-bank call rates closed higher at 8.13 per cent from Tuesday’s close of 8.10 per cent. The rates moved in the range of 7.95 to 8.15 per cent during the day.
The 8.15 per cent benchmark government security, which matures in 2022, ended marginally lower at Rs 99.97 (8.15 per cent) from Tuesday’s close of Rs 100.01 (8.14 per cent).