Rupee rose as expectations are for an investor-friendly Budget and not a voter friendly one. But there was oil and defence demand in the late session which pulled rupee off highs, said Uday Bhatt, a foreign exchange dealer with UCO Bank.
The partially convertible rupee closed at 53.86/87 per dollar compared with its previous close of 54.09/10.
The unit rose as high as 53.63, its strongest since Feb. 11, but retreated a tad on month-end dollar demand from oil companies and defence-related firms.
Yields fall; next FY borrowing figures awaited
Bond yields fell on Wednesday after an economic survey indicated the government was likely to hit fiscal deficit target for the year, providing scope for further monetary easing.
The 10-year bond yield ended 2 basis points (bps) lower at 7.8%.