The dollar's strength against other currencies overseas limited the rupee's gain.
The rupee rose by seven paise to 62.10 against the dollar.
The rupee on Friday breached the psychological 47-mark after six-and-a-half months on heavy dollar outflow, but ended the day with a marginal fall of 15 paise against the American currency at 46.96/97.
Lead indicators suggest that domestic current account deficit (CAD) is likely to reduce in 2023, while macro-economic stability has received a boost from inflation being brought back to the official tolerance band, according to the Reserve Bank of India's (RBI's) January 2023 Bulletin. "With the merchandise trade deficit reaching an all-time high of $83.5 billion in a quarter, and a rise in net outgo from the income account, the current account deficit increased to 4.4 per cent of GDP in Q2FY23," the State of the Economy article in the bulletin said. "It is noteworthy, however, that the CAD for Q1 was revised down from 2.8 per cent to 2.2 per cent on account of downward adjustment in Customs data.
The domestic currency moved in a range between Rs 53.03 and Rs 53.24 per dollar during morning deals.
According to a new report published by Switzerland-based BIS, which is also referred as 'bank for central banks', the US Federal Reserve's announcement of a possible phasing out of easy money regime has resulted in 'abrupt and sizeable' equity market losses in both advanced and emerging markets.
Sustained dollar demand from banks and importers in view of dollar firmness in overseas markets.
The dollar index was down 0.01 per cent at 95.86 against a basket of six currencies in early trade
The ECB on Thursday cut its main refinancing rate to zero from 0.05 per cent.
The rupee had dropped 18 paise against the dollar on Thursday.
A stable dollar will at minimum reduce incremental cross-currency pain for Indian cos.
There was sustained selling of the American currency by exporters ahead of a decision of US Federal Reserve on tapering its monetary stimulus.
The rupee ended almost flat against the dollar.
Chief Economic Advisor (CEA) V Anantha Nageswaran on Tuesday said India is not defending the rupee and the Reserve Bank of India is taking necessary steps to ensure that the movement of the rupee is gradual and in line with market trends. Nageswaran further said that the rupee is being managed in a manner that reflects the fundamentals of the economy. "India is not defending the rupee... I don't think Indian fundamentals are such that we need to defend the rupee. "The rupee can take care of itself," he said at an event in New Delhi.
The price rise of essential food items like vegetables, fruits and cereals, pushed up inflation to five-month high of 6.01 per cent in May.
The rupee on Monday appreciated by 11 paise to 54.64 against the US dollar in early trade at the Interbank Foreign Exchange, aided by selling of the American currency by exporters and banks.
The local currency moved in a range of 59.80 and 60.05 per dollar during the morning trade.
A sluggish dollar movement in overseas markets and continued capital inflows restricted the rupee fall to a major extent, forex dealers said.
Axis Bank was the top gainer in the Sensex pack, surging around 5 per cent, followed by HDFC twins, ICICI Bank, Bajaj Finance and SBI. NSE Nifty zoomed 274.20 points to end at 14,982.
The Reserve Bank's rate-setting panel will start its 3-day deliberations on Wednesday amid expectations of yet another rate hike of 50 basis points to check high inflation, in line with similar actions taken by other major central banks, including the US Fed. Based on the recommendations of the Monetary Policy Committee (MPC), the RBI had effected 50 basis points increase in repo rate each in June and August after raising the short-term lending rate by 40 basis points in an off-cycle decision in May. The MPC, headed by RBI Governor Shaktikanta Das, is scheduled to meet during September 28-30.
Indian stocks and the rupee have benefitted from dollar liquidity induced by the US Fed stimulus.
The domestic unit had lost 9 paise to close at fresh two-and-a-half-month low of Rs 55.21 per dollar in the previous session on continued dollar demand from importers.
The dollar index was last trading up by 0.04 per cent against a basket of six major global rivals.
The rupee had gained by 57 paise, or 1.04 per cent, in previous two days.
Forex dealers say dollar rose against the euro after the European Union cut its economic growth forecast.
The domestic unit hovered in a range of 66.45 and 66.61 per dollar during the day.
The rupee fell because of fresh demand for dollar from importers.
The US dollar jumped in overseas market on Wednesday.
Fresh dollar demand from importers and some banks on the back of smart rise in the US dollar ahead of RBI monetary policy meeting on Tuesday also weighed on the rupee, said forex dealers.
The rupee fell back sharply against the pound sterling at 83.28 from Monday's close of 82.49 and also reacted downwards against the euro to 71.59 from 71.29.
Dollar selling by exporters and banks also supported the rupee, forex dealers said.
On Tuesday, the rupee lost 9 paise to close at 66.67 against the US dollar.
The rupee resumed lower at 54.37 per dollar as against the last closing level of 54.07 at the Interbank Foreign Exchange Market.
Besides, a higher opening in the domestic equity market supported the rupee but yen's weakness against the dollar overseas capped the rupee's gains, dealers said.
The rupee resumed higher at 53.26 per dollar.
Weak dollar in the overseas market also boosted the rupee value against the dollar, a forex dealer said.
Foreign institutional investors pumped in nearly $167.35 million (Rs 899.83 crore) into the local stock markets on Tuesday, according to the BSE provisional data.
The Sensex and Nifty spiralled lower for the fourth session on the trot on Wednesday as investors remained on edge ahead of US inflation data, which will give clues on the Federal Reserve's policy tightening trajectory. Unabated selling by foreign institutional investors and a jump in crude prices also weighed on sentiment, traders said. Despite a firm start, the 30-share BSE Sensex failed to carry forward the momentum and ended at 54,088.39, lower by 276.46 points or 0.51 per cent. During the day, it tumbled 845.55 points to 53,519.30.
The rupee had strengthened by 20 paise to close at 55.11 against dollar in Tuesday's trade on fresh selling of US currency by exporters.
A higher opening in the domestic equity market and the strengthening of euro and yen against the dollar overseas also aided the rupee, dealers said.
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