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Mumbai: The Indian rupee strengthened on Wednesday to close at 11-month high against the greenback as the dollar index weakened against a basket of six major currencies.

The Indian currency closed at 72.85 against the US dollar, a level last seen on 2 March 2020, from its previous close of 72.89. Meanwhile, the dollar index fell 0.03% to 90.42.

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“Rupee is trading within the tight range of 72.75-73.15. Currently, the market is flat and volatility is muted. The upbeat sentiments on account of optimism about a global recovery and inflows into local stocks will help Indian Rupee to appreciate, but likely RBI intervention at around 72.80-75.75 zone may limit the fall in rupee pair," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.

"So we will expect rupee to continue to trade sideways with bearish bias in between 72.75-73.20 zone. The 72.75 mark is acting as a strong support and break of which could push prices towards 72.50. However, on upside 73.05-73.20 will continue to act as a strong resistance levels." he added.

The rupee started on a positive note against the greenback on Wednesday "as the US dollar takes a tumble amid improved risk appetite in the broader markets," Reliance Securities said in a research note. However, most Asian currencies have started weak this morning and again, RBI's presence in the markets could cap gains, the note added.

The Indian currency gained despite lacklustre trade in the domestic equity market. The 30-share BSE benchmark Sensex closed 19.69 points lower to 51,309.39, and the broader NSE Nifty fell 2.80 points to 15,106.50.

Foreign institutional investors have net bought $34.01 billion in equity and are net sellers of $5.01 billion in debt markets since the beginning of fiscal year, while domestic institutional investors sold 1.30 trillion in stocks, according to data on the exchanges.

(PTI contributed to the story)

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