Mumbai: The rupee continued its upward march for the third straight day on Wednesday by gaining eight paise to close at 55.49 against US dollar on continued selling of the American currency by exporters and robust capital inflows.
At the Interbank Foreign Exchange (Forex) market, the rupee opened at 55.45 a dollar from its last close of 55.57.
Later, it exhibited side-ways movement as it traded in a tight range of 55.36-55.55 before closing at 55.49, a rise of eight paise. In the last three days, it has gained 26 paise against the dollar.
Some weakness in the local stock market amid a rising trend pared rupee's early gains, forex dealers said.
They added that the late dollar demand from importers, mainly oil refiners, was seen ahead of Greece Prime Minister's meeting with the Eurogroup head later today.
The dollar index, consisting of six major currencies, was up by 0.14 percent while New York crude oil was trading around USD 96.5 a barrel in Europe on Wednesday.
Foreign Institutional Investors (FIIs) injected nearly Rs 100 crore today as per stock exchanges data, helping support rupee.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The rupee shed most of its gains towards the end on rebound in dollar index. The dollar index rebounded from its low of 81.85 levels to above 82.00 levels as expectations of stronger economic numbers in later session and the FOMC minutes shall dampen the QE hopes".
The rupee is consolidating for a long time and we see a break-out coming soon drifting the rupee to 56 levels, said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The Indian stock market benchmark Sensex today softened by 38.40 points, snapping a two-day rally.
The premium for the forward dollar recovered marginally on fresh payment pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in January rose to 169-171 paise from Tuesday's close of 167-1/2-169 paise.
The premium for far-forward contracts maturing in July also recouped to 322-324 paise from 319-320 paise.
The RBI has fixed the reference rate for the US dollar at 55.5105 and for euro at 69.1465.
The rupee softened further against the pound sterling to 87.62 from overnight close of 87.57 and also eased against the euro to 69.07 from 69.02.
It, however, fell back slightly against the Japanese yen to 70.00 per 100 yen from its last close of 69.95.