Rupee pares a few early gains, up 4 paise against dollar

The rupee resumed higher at 65.11 per dollar against yesterday’s level of 65.18 at the Interbank Foreign Exchange (Forex) market.

Dealers said apart from increased selling of the USA unit by exporters and banks, weakening of dollar overseas where it dropped to about three-week low against basket of major currencies, also supported the domestic currency. A interest rate hike may signal that the Fed sees the U.S. economy on a sustainable economic growth path, which may raise demand for dollar and dollar-denominated assets and, thus, could push pressure on emerging market currencies like the rupee. The yield on local sovereign bonds due May 2025 fell two basis points to 7.56 per cent, according to prices from the Reserve Bank of India (RBI)’s trading system. The rupee closed at 104.42 against the dollar.

Dealers said importer dollar demand has reduced following government measures to discourage vehicle imports.

The trading range for the spot $ vs Rs pair is expected to be within 64.70 and 65.70.