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Sep 06, 2012, 08.40 PM IST
The rupee snapped a three-day losing streak on Thursday boosted by corporate dollar sales and gains in the euro, which rose on hopes the European Central Bank would announce a plan later in the day to aid the ailing euro zone economies.
The euro edged up but looked fragile on concerns the ECB's latest plan to tackle the region's debt crisis, to be announced at 1230 GMT, could lack details. However, lack of details alone was unlikely to cause a sell-off in the euro, traders said.
The euro had rallied sharply on Wednesday after a string of leaks from euro zone officials provided markets with more confidence that Draghi will try to back up his pledge to do "whatever it takes" to save the euro.
"Corporate dollar sales in late trade helped the rupee gain while the euro's rise also helped," said Sunny Tirkey, forex dealer with State Bank of Travancore.
"Today evening's ECB meeting outcome will be watched and will be key for direction tomorrow," he added.
The partially convertible rupee closed at 55.65-66 per dollar, as per the SBI closing level, versus its previous close of 55.9050-9150. The unit had dropped to a three-week low of 56.03 earlier in the session.
The rupee had been pushed past the 56 mark due to persistent dollar demand from oil companies, the largest buyers of dollars in the domestic currency market.
Traders said gains in the domestic stock market post-noon also helped the recovery in the rupee. The Sensex closed up 0.2% led by gains in technology stocks.
One-month non-deliverable offshore forwards contract was trading at 55.96 while the three-month was at 56.60.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 55.8950 with a total traded volume at around USD 3.6 billion.
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