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The rupee is trading higher at 61.02/03 versus Tuesday's close of 61.19/20 with dollar selling cited by two large foreign banks.
"Two foreign banks have been selling which further pushed up the rupee, which looks like custodial inflows," says a dealer.
Foreign funds have poured $3.5 billion into Indian stocks and bonds so far in March, as per regulatory data.
Dollar is at its lowest level in more than four months against a basket of currencies ahead of Janet Yellen's inaugural policy as Fed chief.
