The Indian rupee gained on Wednesday, recovering from earlier losses after a government panel recommended an immediate increase in state-subsidised diesel prices, reducing some of the concerns about the country's finances. "The market is getting more bullish after the diesel price hike recommendation. The immediate direction, however, depends on the (US) Fed meet outcome. Though nothing major is expected, one must be prepared to expect the unexpected," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
"There is strong support for the dollar at 60.90, while 61.80 is the likely cap at the moment." The partially convertible rupee closed at 61.2350/2450 per dollar compared with 61.31/32 on Tuesday. It moved in a range of 61.23 to 61.60 during the session. Earlier in the day, weaker Asian currencies ahead of the outcome of the US Federal Reserve's two-day meeting pressured the rupee, but gains in local shares limited a very sharp downside.
India's benchmark BSE index rose on Wednesday to close at a record high, helped by strong foreign flows. In the offshore non-deliverable forwards, the one-month contract was at 61.66, while the three-month was at 62.65.