USD/INR closed at 72.37 against its open at 72.71.Dollar ended off-fresh record high Wednesday on pessimism post reports the Reserve bank of India may mull over the possibility of opening a separate window for oil marketing companies to buy dollars instead of buying them from the open market.
Also, news of government considering ways to cut "non-necessary" imports to stem an outflow of dollars supported the local currency further. "Selling in the market started after the news that government will soon come up with further measures to curb depreciation in rupee and continued after rumours of RBI planning to open separate oil window.
A separate dollar window for oil-marketing companies will allow the apex bank to supply them their requirements directly from foreign exchange reserves and reduce demand for dollars from the market.
However, during intraday day trades, the spot pair pared losses as investors took advantage of the arbitrage opportunity created between spot, offshore market.
While, in the morning trades, the Reserve Bank of India intervened to stem any gains in spot pair, followed by exporters' selling.
On the global front, greenback traded mixed against its major peers on lack of fresh economic data to drive the market while investor sentiments remained subdued owing to escalating trade war between the US and China.
Earlier this week, President Donald Trump announced new tariffs on approximately $200 billion worth of Chinese imports, although the tariffs will initially be set at 10% compared to the 25% previously floated by the administration.
However, the tariffs are set to rise to 25% on Jan 1, and Trump said the US would impose tariffs on another $267 billion worth of Chinese imports if China takes retaliatory action.
On Tuesday, China added $60 billion of US products to its import tariff list in retaliation for President Donald Trump's planned levies on $200 billion worth of Chinese goods, effective Sep 24.
Sensex provisionally ends 166 points lower with 16 components in the red.