Erasing initial gains, Indian Rupee ended weaker against dollar on Wednesday on account of sustained dollar demand from importers and banks. Sentiments were fragile with data showing that India’s trade deficit widened to a record $31 billion in July with a sequential decline in exports and somewhat flat imports owing to growing recessionary trends in developed economies and elevated commodity prices. Merchandise exports declined to a five-month low at $35.2 billion in July while imports eased sequentially to $66 billion. Traders were also worried after India's services sector lost momentum in July as demand was curtailed by competitive pressures, elevated inflation and unfavourable weather. The seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 59.2 in June to 55.5 in July, pointing to the slowest rate of growth in four months. On the global front, dollar edged lower on Wednesday but held on to most of the previous day's gains, after leaping on Federal Reserve officials' hints at aggressive rate hikes and drawing support amid a U.S.-China flare-up over Taiwan.
Finally, the rupee ended at 79.18 (provisional), weaker by 65 paisa from its previous close of 78.53 on Tuesday. The currency touched a high and low of 79.21 and 78.70 respectively.
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