Forex dealers said besides the dollar's gains against the euro overseas, increased demand from importers for the US currency and a lower opening in the domestic equity market also put pressure on the rupee.
On Monday, the rupee recovered from four-month low by rising 25 paise in its biggest gain in three weeks to end at 60.93 against the Greenback as shares soared ahead of the RBI's bi-monthly policy meet and exporters offloaded dollars.
The domestic currency had lost 63 paise to close at over four-month low of 61.18 against the dollar in Friday's trade on weakness in global stock markets and a strong US currency overseas.
The rupee had retreated from nearly two-week high and ended three paise lower at 60.12 against the Greenback in yesterday's trade.
Forex dealers said besides capital inflows, selling of the US currency supported the rupee but a lower opening in the domestic equity market and dollar's strength against other currencies overseas capped the gains.
Traders expect the rupee to remain wedged between the 59.60 and 60.50 levels in the absence of any key triggers in the near-term.
Traders also say oil-related dollar demand is capping broader gains in the rupee.
The partially convertible rupee closed at 60.30/31 per dollar compared with 60.28/29 on Friday.
The partially convertible rupee closed at 60.19/20 per dollar versus its close of 59.75/76 on Wednesday after earlier gaining to a one-week high of 59.57.
Forex dealers said though increased demand for the US currency from importers put pressure on the rupee but a higher opening in the domestic equity market and the dollar's rise against other currencies overseas, capped the losses.
It moved in a range of 59.80 and 59.99 per dollar during the morning deals.
The rupee resumed higher at 59.69 per dollar as against the last closing level of 59.73 at the Interbank Foreign Exchange market.
The rupee resumed higher at 60.13 per dollar as against the last closing level of 60.20 at the Interbank Foreign Exchange market, and hovered in a range of 60.07 and 60.18 per dollar before quoting at 60.08 at 1000 hours.
Forex dealers said besides increased dollar selling by exporters, strength in other currencies against the American currency overseas also supported the rupee but a lower opening of the domestic equity market capped the gains.
Traders will continue to focus on the measures new Prime Minister Narendra Modi-led government will take to bring down the fiscal deficit and fight inflation.
Central bank steps up dollar purchases to check rupee gains
The rupee had surged 37 paise to end at a nine-month high of 59.68 against the dollar on Tuesday. Forex market remained closed on Wednesday for 'Buddha Purnima'.
Weakness of the dollar in the overseas market also boosted the rupee, a forex dealer said.
Most dealers said the heavy buying by state-run banks was on behalf of the central bank, looking to limit the volatility in the rupee, in the face of foreign fund flows into the share market.
The rupee had gained 6 paise to close at 60.07 against the dollar in Thursday's trade on fresh selling of the American currency by banks and exporters in view of strong capital inflows.
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