The rupee advanced against the US dollar on Wednesday, tracking a rise in other regional currencies against the greenback. But, gains in the Indian unit may be capped due to a lackluster stock market today and a choppy euro.
The euro softened a bit in Asian trading, falling from a one-week high against the dollar, on speculation that Greek Prime Minister George Papandreou will struggle to pass an austerity package through parliament even after winning a confidence vote.
Global markets' focus will turn to the Federal Reserve later today.
The Fed is due to announce its interest rate decision on Wednesday. It is widely expected to repeat its commitment to keeping interest rates low for an extended period.
The US central bank policy makers will keep the benchmark at zero to 0.25%, where it has been since December 2008.
But, the dollar strengthened against higher-yielding currencies amid worries that Europe’s fiscal woes will slow global growth.
The Fed is scheduled to end its US$600bn second round of bond-buying or so-called quantitative easing (QE) this month.
