The rupee pared morning losses to strengthen against the dollar on positive domestic markets. At 4.35 p.m., the Indian unit was trading higher at 54.85 against the dollar.
Falling back to 55-levels, the rupee opened weaker at 55.07 from Monday's close of 54.96 per dollar on the back of month-end dollar demand from importers and uncertainty over the US’s impending fiscal crisis concerns. The foreign exchange markets had remained closed on Tuesday due to Christmas festival.
Further, Japanese yen sank to a 20-month low in Asian trades strengthening the dollar.
The rupee will remain range-bound due to concerns of the fiscal cliff and limited year-end capital flows into the market.
In addition, month-end demand for dollars will continue to put pressure on the rupee.
