The Indian rupee ended firmer on Tuesday as the dollar dropped against the euro, while sliding local stocks kept gains in check, dealers said.' The rupee ended at 43.80/81 per dollar, after gaining one third of a percent from Monday's 43.94/96. It struck a high of 43.77 before slipping on some renewed dollar buying by hedge funds keen to exit from the falling stock market, dealers said.
"It was again the euro's gains overseas against the dollar which gave the rupee broad direction and helped it offset the pressure from the weakness in the stock market," a dealer at a state-run bank said.
In European trade, the single currency was at $1.3156/61, boosted by a survey showing upbeat German investor sentiment.
Traders overseas were also waiting for data on the US trade deficit to decide on whether to resume purchases of the dollar, which rallied last week following comments from the US treasury Secretary John Snow backing a strong greenback.
Indian currency dealers said the slide in the domestic stock market weighed on the rupee.
"The fall in the index is a slight concern though the hope is that once earnings start coming in we could see a recovery," a trading head at a private bank said.
Record high overseas fund investments of nearly $8.5 billion in 2004 had helped the rupee gain nearly 5 percent over the year.
Rupee premiums on forward dollars moved in a narrow range before settling lower, tracking the spot rupee. The annualised premium on the benchmark six-month dollar edged down 2 basis points to 2.01 percent.
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