The rupee washed out major part of its initial gains on late dollar demand, closing just two paise higher at 45.30/31 against the US currency on smart recovery in local equities amid a weak greenback overseas.

Dealers attributed initial rally in the rupee value to smart rebound in local stocks amid weak dollar overseas as well as some dollar selling by exporters.

Importers generally bought dollar at the fag end of month to meet their month-end requirements, a forex dealer said.

The Bombay Stock Exchange benchmark Sensex today bounced back by over 197 points or 1.11 per cent after falling by nearly 165 points or 0.91 per cent yesterday.

The dollar index was down by 0.4 per cent against a basket of currencies while US crude oil was trading below USD 101 a barrel in European market today.

Meanwhile, food inflation surged to a one-month high of 8.55 per cent for the week ended May 14 from 7.47 per cent in the preceding week.

“GBP & Euro’s gain aided rupee to trade stronger against the dollar, local equities also traded positively & closed up by more than 1 per cent which helped Rupee to appreciate.

Looking at the weak dollar one can expect Rupee to gain against greenback,” Aplari Forex (India) CEO Pramit Brahmbhatt said.

“The trading range for the USD/INR will be between 45.10 to 45.60 tomorrow,” he added.

In a see-saw trade at the Interbank Foreign Exchange (Forex) market, the domestic unit opened strong at 45.23/24 a dollar from previous 3-month closing low of 45.32/33 and immediately touched a high of 45.20.

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