Dollar sales by foreign banks also helped ease the pressure, traders said.
The dollar index fell 0.3% to 107.9, while other Asian currencies gained between 0.2% and 0.9%. Earlier on November 25, due to the repricing of MSCI Flow, the rupee had increased by 17 paise.
“The Indian rupee rose to 85.65 earlier in the day as the dollar index fell, dollar buying from importers and oil companies pushed the rupee to 85.72/$1,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
The Reserve Bank of India (RBI) was present in the market to ensure that the rupee does not strengthen further, as the RBI likely absorbs the dollar, traders said. The pressure on the rupee was temporarily released on Tuesday, but is expected to continue until Donald Trump takes office as the next US president on January 20, a trader at a public sector bank said.
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Market participants now await US jobs data on Thursday along with non-farm payrolls data on Friday. Those data sets will provide further clues on the path of interest rates by the US Federal Reserve.
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