Mumbai: The Indian rupee declined in early trade on Wednesday. It opened lower by 18 paise at 61.12 per dollar as against 60.94 a dollar Tuesday.
Rohini Malkani of Citi said continued compression in current account deficit (CAD) coupled with a pick-up in capital flows has created a constructive balance of payment (BoP) environment for the rupee.
However, he does not expect the rupee rally to extend beyond 60/dollar as he feels RBI would step in to rebuild reserves and increase the forex import cover.
The yen held onto gains early on Wednesday while investors kept their distance from risk currencies such as the Australian dollar amid worries about China's economic health. The euro pulls back helping the US dollar index edge up towards 80 levels.
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