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 rose between 0.2% and 0.9%. The rupee had previously logged a 17-paisa gain on November 25 due to repricing of MSCI flows.
“As the dollar index fell, the Indian rupee gained up to 85.65 during the day before dollar buying from importers and oil companies pushed the rupee to 85.72/$1 levels,” said Anil Bhansali, head of treasury, Finrex Treasury Advisors.
The Reserve Bank of India (RBI) was present in the market to make sure the rupee does not strengthen much, as RBI likely absorbed dollars, traders said. The pressure on rupee was released temporarily Tuesday, but is expected to continue until Donald Trump takes office as the next US President on January 20, a trader from a public sector bank said.
Market participants are now looking forward to the jobs data from the US on Thursday, along with the non-farm payroll data on Friday. Those data sets will give further cues on the interest rate trajectory by the US Federal Reserve.
