Rupee gains 38 paise in closing trend

The rupee on Tuesday gained 38 paise to close at 49.07/08 against the US currency on dollar selling by banks and exporters and sharp rise in equity markets.

Investors turned to risky assets like stocks and safe haven gold as dollar weakened against major currencies like euro, dealers said.

The euro edged up against the dollar on hopes that eurozone might bring a bail-out plan to debt-ridden Greece to contain the region's debt crisis.

At the Interbank Foreign Exchange (Forex) market, the local unit opened strong at 49.17/18 a dollar from previous close of 49.45/46.

It fell back to a low of 49.30 in late morning deals on dollar demand from importers, mainly oil refiners, and also sustained capital outflows.

Later, supply exceeded the demand and it recovered sharply to a high of 49.06 before concluding at 49.07/08, a rise of 0.77 per cent.

"Strong support for USD/INR pair is seen at 49.00 levels and the trading range will be 48.90 to 49.40 tomorrow," Alpari Financial Services (India) CEO Pramit Brahmbhatt said.

The BSE benchmark Sensex, after a steep fall of 1,048.18 points, or 6.12 per cent, in last four trading sessions, recouped by nearly 473 points today, which mainly helped the rupee rise.

FIIs, extracted USD 695.33 million in last three trading days since September 22, as per Sebi data.

The Reserve Bank of India fixed the reference rate for the dollar at Rs 49.1775 and the euro at Rs 66.6331.