The rupee closed stronger against the dollar on Thursday after the U.S. Federal Reserve kept its key interest rate steady in line but signalled three cuts next year.
After opening at Rs 83.28, the currency strengthened 7 paise to close at Rs 83.33 against the greenback. On Wednesday, it had depreciated nearly 2 paise to close at an all-time low of 83.402.
The dollar and the US Treasury yields took a tumble overnight after the Fed's announcements.
"Rupee may move in a range of 83.20 to 83.40 after a lowest closing below 83.40 yesterday as RBI buys and sells dollars to keep rupee in a small range," Anil Bhansali, executive director at Finrex Treasury Advisors LLP, said.
The Fed sounded dovish on the monetary-policy guidance and Chair Jerome Powell did not make much of an effort to push back against market expectations of early rate cuts, according to Kunal Sodhani, vice president of Shinhan Bank.
The European Central Bank and the Bank of England may sound dovish as well, Sodhani said. "For USDINR, 83.20 acts as a support, while 83.40 a resistance."
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