Rupee rebounds from 6-week lows

The rupee on Wednesday staged a smart recovery after falling to a six-week low initially to close with a 18 paise gain at 53.80 on sustained dollar sales by exporters in view of weak US currency in overseas markets.

At the Interbank Foreign Exchange market the local unit resumed slightly better at 53.96 a dollar from on Tuesday's close of 53.98.

But soon after initial dollar demand from importers, mainly oil refiners, pushed rupee down to nearly six-week intra-trade low of 54.23, a level not seen since September 20.

The rupee, however, bounced back to 53.77 on dollar selling by exporters amid firm domestic stocks, before concluding at 53.80 -- a rise of 18 paise or 0.33 per cent.

The dollar index was down by 0.23 per cent against a basket of six major currencies

on cautious trade ahead of the reopening of US financial markets later in the day for the first time after hurricane Sandy.

New York crude oil was trading above $86 a barrel in European trade on Wednesday.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The liquidity flow in global markets continued to guide the risk on sentiments inducing strengths in rupee...

The dollar index continued to edge lower on expectations of the Fed to continue the liquidity programme to overcome the mass destruction caused by Hurricane Sandy."

Rupee's gains today were second straight in a row after it belied expectations by rising 10 paise to claw back to 53-level after RBI disappointed market by not cutting repo rate on Tuesday.

The rupee had weakened recently amid foreign institutional investors pulling out $119.51 million from stocks in the past four sessions since October 25.