In line with the smart recovery in local equity markets from its early low, the Indian rupee also rebounded from its initial weakness and ended up by nearly four paise to 48.68/70 against the greenback.
In active trade at the Interbank Foreign Exchange (Forex) market, the local currency resumed sharply down at 48.83/84 a dollar from the previous close of 48.72/73, and touched a low of 48.88 per dollar.
It recovered sharply in the later part of the day in line with the equity markets and ended at 48.68/70.
On Tuesday, it was down by 15 paise against the dollar.
Dealers attributed the early fall in the rupee to a firm dollar overseas against its major rivals after the US Senate passed the $838 billion economic stimulus plan to tackle the deepening recession.
However, fears over the effectiveness of the rescue plan weighed on the global equity markets and they displayed weak trends. Asian indices ended gave a mixed performance on Wednesday while Wall Street on Tuesday tumbled sharply.
The Indian benchmark Sensex initially fell by nearly 189 points but recovered on expectations of tax sops in the forthcoming interim budget, to be announced on February 16, helping the rupee recovery. It later bounced back to end lower by only 29 points or 0.30 per cent.
The anticipation of increased capital inflows after the easing of foreign direct investment (FDI) norms by the government also helped the rupee recovery.
The Reserve Bank of India, however, fixed the reference rate for the US dollar at Rs 48.82 and for the euro at Rs 63.07.
The rupee premiums on the forward dollar ended higher on paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in July ended up at 50-52 paise from 47-1/2-49-1/2 paise on Tuesday and the far-forwards maturing in January closed higher at 87-1/2-89-1/2 paise from 84-1/2-86-1/2 paise previously.
In cross-currency trade, the rupee improved against the pound sterling and the euro while moved down further against the Japanese yen.
The local currency rallied sharply against the pound sterling to end at Rs 70.08/10 from the last close of Rs 72.13/15 and also rose against the euro to Rs 62.99/63.01 from the overnight close of Rs 63.24/26.
It, however, dipped further against the Japanese yen to close at Rs 54.09/11 per 100 yen from the previous close of Rs 53.38/40.
Source : profit.ndtv.com