MUMBAI: The Indian rupee rose slightly, snapping a two-day losing streak, as a sharper-than-expected fall in retail inflation and a slight expansion in industrial output reinforced optimism the domestic economy was on the mend.

Data late on Wednesday showed consumer price inflation eased more than-expected to a 25-month low of 8.10 percent in February, while industrial output unexpectedly expanded, albeit only by 0.1 percent.

The data cemented confidence about the economy, especially on the back of a sharply narrowing current account deficit, and raised expectations the Reserve Bank of India would keep interest rates on hold at its policy review on April 1.

The rupee closed at 61.17/18 per dollar compared to 61.2150/2250 on Wednesday. It moved in a range of 60.91 to 61.19 during the session.

Still, broader gains were capped as much of the positive news is seen to be priced in, given the rupee is trading at around seven-month highs, while traders preferred to wait and watch ahead of wholesale price inflation data, due on Friday.

“Rupee opened stronger tracking Asians and the retail inflation data but later there was good dollar buying seen from across segments. There was likely some defense buying too,” said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank.