The rupee closed up at 82.80 to the US dollar compared with a close at 82.8275 in the previous session. The currency hit a low of 82.85 on Monday, its lowest since February 27.
The gains in the capital market are supporting the rupee from any fall, while traders are also keeping a watch on the US debt ceiling talks, said Jateen Trivedi, research analyst at LKP Securities.
The rupee could trade in the range of 82.75-83 in the near term, Trivedi said.
Traders and analysts expect India’s central bank to defend the rupee if it falls to around 83 levels. The central bank has shored up its forex reserves through interventions in recent weeks.
Meanwhile, the US dollar index edged up 0.2%, after rising 2% in the past two weeks.
The dollar rose after hawkish signals from the US Federal Reserve officials overnight. Minneapolis Fed President Neel Kashkari said it was a “close call” whether he would vote to raise interest rates or pause at next month’s meeting.
Meanwhile, St. Louis Fed President James Bullard said the US central bank may still need to raise the benchmark interest rate by another half point this year.
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