The Indian rupee closed stronger against the US dollar tracking the slight decline in the dollar index.
The local currency strengthened 3 paise to close at Rs 83.32 against the US dollar. It had closed at Rs 83.35 against the US dollar on Wednesday.
The Indian rupee had a weak opening on Tuesday, tracking the overnight rise in the dollar index and US Treasury yields, only to turnaround and close the day stronger.
"The recent depreciation of rupee against the US dollar towards Rs 83.33 has captured attention, it's essential to view this as a temporary phase rather than a lasting decline," Amit Pabari from CR Forex Advisors wrote.
The dollar index fell 0.14% to 104.97, while the US Treasury yields inched upward to 4.61% after a Federal Reserve report showed continued expansion in US economic activity.
The rupee may trade in a narrow range of Rs 83.30–83.40, given the expectations of MSCI rebalancing flows of about $2.8 billion happening on Friday, according to Anil Kumar Bhansali, executive director and head of Treasury at Finrex Treasury Advisors LLP. "Exporters are again getting a chance to hedge their receivables."
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