Rupee up two paise vs USD at 55.73

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed better at 55.70 a dollar from previous close of 55.75.

Later, it moved in a volatile manner between 55.60 and 55.78 before concluding at 55.73 - two paise higher from the previous close.

Dollar selling was seen by exporters as also buying by importers, but demand was little bit more than supply, aiding the rupee rise, said forex traders.

On a weekly basis, the rupee weakened by 45 paise from last weekend's closing of 55.28 a dollar.

Globally, the dollar index was up by 0.06 per cent today against a basket of six major global currencies while New York crude oil was trading above $95 a barrel in Europe.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The rupee today witnessed one of its narrowest trading ranges (18 paise for the whole day) in last 10-12 months. The markets lacked momentum and remained in a confined range recording lower volumes".

The European currency witnesses a modest rebound against the US dollar after the German Chancellor said their country is ready to help the ECB in solving the debt crisis of the region.

"After rupee breaching 56 levels it is again seen trading range bound on account of optimism from Eurozone. The conclusion on the Euro crisis is still far as there are a lot of issues to be addressed," said Abhishek Goenka, Founder & CEO, India Forex Advisors.

Meanwhile, the Indian stock market benchmark Sensex, which was up by about 144 points at midsession, reacted downwards at the fag end and ended up by a mere 34 points after the CAG came out with important reports.

"The CAG tabling three reports in Parliament pushed the equity markets lower but the global risk on mode continued to lift the markets up once again to end the day on a positive note," Brahmbhatt said.

The premium for the forward dollar remained weak on sustained receipts by exporters. The benchmark six-month forward dollar premium payable in January declined to 171-173 paise from Thursday's close of 174-176 paise.

The premium for far-forward contracts maturing in July also dropped to 326-328 paise from 331-333 paise. The RBI has fixed the reference rate for the US dollar at 55.7023 and for euro at 68.8510.

The rupee recovered against the pound sterling to 87.48 from last close of 87.53 while it improved further against the Japanese yen to 70.17 per 100 yen from 70.36.

The rupee, however, fell back against the euro to end at 68.88 from overnight close of 68.47. The Forex markets will remain closed on Monday, August 20, on account of "Ramzan Id".