Rupee recovers to close at 56.17 against dollar

The rupee closed at 56.17 to the dollar versus its Tuesday close of 55.9550-9650. Losses in domestic share market and broad gains in the dollar versus majors and other Asian currencies weighed on the India currency on Wednesday.

The rupee fell as much as 56.37 in intraday trade, its lowest since July 25, 2012, when it hit the 56.43 mark against the greenback. (Read: Rupee may hit 60 soon)

Some dealers cited non-deliverable forwards-related dollar buying in the domestic market as one of the key reasons for the rupee's weakness.

The three-month NDF (non-deliverable forwards) traded at 57.24 compared with its onshore counterpart which stands at 57.26.

Dealers said month-end dollar demand from oil companies and other importers is also likely to boost the dollar.

The dollar gained broadly in early Asian trade on Wednesday after robust economic data boosted Treasury yields and raised expectations that the Fed may make an early exit from its easing scheme, making the greenback more attractive. (Read: How a weaker rupee affects you)

(With inputs from Reuters)