Rupee Closes Stronger Against Dollar

The Indian rupee closed stronger against the dollar on Tuesday ahead of the outcome of the US Federal Open Market Committee's meeting the next day. The local currency closed three paise stronger at Rs 83.44 against the greenback. It had closed at Rs 83.47 on Monday, according to Bloomberg data.

"US economic data shows a slight decline in the Dallas Fed Manufacturing Index. German CPI inflation continues to rise, but below forecasts," Kunal Sodhani, vice president of Shinhan Bank, said. "The Fed is expected to emphasise keeping interest rates restrictive for a longer period."

The start of the election has contributed to the rupee's weakness despite the RBI's efforts. The volatility is expected to persist with the polls underway, according to Jateen Trivedi, research analyst - Commodity and currency at LKP Securities.

Significant events this week include the US interest rate decision on Wednesday night and the US non-farm payroll and unemployment data on Friday evening. These events are likely to provide fresh triggers for both the dollar index and the rupee, Trivedi said.