It had earlier reached 82.3625 on the interbank order matching system, its highest level since Feb. 20. The rupee's opening price action "was quite surprising", a trader at a private sector bank said.
"It would be fair to infer that it was either flow-related or stop loss-related." He pointed to the potential of a large dollar inflow via a public sector bank. The State Bank of India said on Tuesday that it had raised $1 billion via a syndicated social loan for further lending.
"If there is a real flow, then we should witness another leg lower (on USD/INR pair) in the afternoon session," another trader said.
The rupee was helped by the Chinese yuan-led rally on Asian currencies following an upbeat manufacturing data.
China's manufacturing activity expanded at the fastest pace in more than a decade in February, an official index showed on Wednesday, smashing expectations. Hong Kong and Chinese equities climbed and the offshore yuan rose above 6.92 to the dollar. The yuan is headed for its best session in a month. The dollar index pulled back to 104.85, while the 2-year U.S. yield rose to 4.83%.
U.S. ISM manufacturing data, which will provide investors cues on how the economy is holding up and on the interest rate outlook, is due later in the day. "The ISM manufacturing PMI should continue reflecting the fragility of the sector in February," Australian bank Westpac said in a note.
Economists polled by Reuters expect a reading of 45.1,
signalling a contraction in activity.
(Reporting by Nimesh Vora; Editing by Sohini Goswami)
