At the interbank foreign exchange market, the local unit opened at 81.73 and touched an intra-day high of 81.52 and a low of 81.82 against the greenback.
It finally ended at 81.56 (provisional), registering a rise of 18 paise over its previous close.
On Tuesday, the rupee settled at 81.74 against the US dollar.
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However, FII outflows and recovery in US Dollar capped sharp gains.
Choudhary further noted that the dollar gained as traders are adjusting their positions ahead of US CPI inflation data.
The dollar also gained on safe-haven appeal as the
"We expect the Rupee to trade with a positive bias amid risk-on sentiments and weak crude oil prices. However, sustained outflows by foreign investors may cap sharp gains. Investors may remain cautious ahead of inflation data from the US and India on Thursday. USD/INR spot price is expected to trade in a range of Rs 81 to Rs 82," Choudhary said.
The dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.06 per cent to 103.30.
Global oil benchmark Brent crude futures rose 0.42 per cent to
On the domestic equity market front, the 30-share BSE Sensex declined 9.98 points or 0.02 per cent to end at 60,105.50, while the broader NSE Nifty fell 18.45 points or 0.1 per cent to 17,895.70.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 2,109.34 crore, according to exchange data.
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