The Rupee appreciated by 8 paise to 65.10 against the US dollar in early trade on Wednesday. The domestic currency had fallen by 43 paise to close at 65.18 against the greenback in the previous session amid persistent dollar demand from banks and importers.
However, the dollar index hit a three-week low in overnight trade after disappointing Chinese import data intensified worries over the global economic outlook and raised bets that the US Federal Reserve would not hike interest rates until 2016.
The index, which tracks dollar movement against a basket of six major world currencies, stood at 94.66, down 0.1 per cent.
A interest rate hike may signal that the Fed sees the US economy on a sustainable economic growth path, which may raise demand for dollar and dollar-denominated assets and, thus, could push pressure on emerging market currencies like the rupee.
The dollar-rupee ratio is going to remain in a range, broadly between 64.50 and 67. I have been saying this for some time, and I am not going to change it just because of the ongoing government push (for more global investment).
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