Mumbai: Staging a smart recovery, the rupee on WEdnesday settled 4 paise higher at 65.27 against the US dollar despite plunging to fresh two-year low in early trade amid global currency volatility.
Besides, fresh dollar selling by exporters and suspected RBI intervention through state-owned banks predominantly
triggered the rupee recovery as emerging market currencies continued to founder amid worries over the Chinese economy, forex dealers said.
The rupee is likely to remain an out-performer among emerging market currencies and less vulnerable to China's yuan
devaluation against the backdrop of robust forex reserves, they added.
The local currency also benefited from a smart rebound in local equities as well as subdued greenback overseas. The dollar traded marginally lower against the major currencies as investors turned bit cautious and awaited US inflation data and the minutes of the Fed's July meet later in the day to track timing of a rate hike.
The rupee opened substantially lower at 65.40 from Monday's closing level of 65.31 at the Interbank Foreign Exchange (Forex) market due to sustained demand from importers and foreign institutional investors.
It weakened further to hit a fresh two-year low of 65.44 in late morning trade. However, smart recovery in local equities and fresh selling of dollars by exporters helped the local unit to rebound to touch a high of 65.11 before ending at 65.27, revealing a gain of 4 paise, or 0.06 per cent.
The US dollar index, which tracks the greenback against a basket of six major rivals, was down by 0.03 per cent at
96.96.
Meanwhile, the benchmark BSE Sensex rebounded sharply by 100.10 points, or 0.36 per cent, to settle at 27,931.64.
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