The rupee strengthened by around two paise today to close at 48.8775/8900 to a dollar as against the previous close of 48.9050/9100. Dollar sales by exporters, triggered by expectation of the rupee hardening to the 48.50 levels, resulted in the Indian unit firming up. Forwards edged lower on the back of easy call rates.
The rupee was stable in the early morning trades at 48.9050/9100 level. But selling by banks towards close and a weak dollar helped the rupee to recover to 48.8775/8900.
The Indian unit is currently over 3.5 per cent undervalued on trade-weighted real terms on account of the weak dollar. Forex dealers suggested that importers may keep their positions open in view of better levels (expected appreciation) that the rupee could hit while the exporters could sell near term forwards.