The rupee ended weaker on Tuesday, giving up most of the previous day's gains, after India's central bank mopped up the bulk of dollar inflows from foreign funds investing in the country's booming stock market, dealers said. The rupee ended at 43.8150/8200 per dollar, weaker than its previous close of 43.7500/7575, with the dollar's rise overseas also weighing on sentiment. "The state-run banks were there bidding up the dollar right until close of trade," a dealer at a foreign bank said.
"They have absorbed almost all the dollar inflows today and we expect them to continue in the next few days."
The rupee has now lost 1.2 percent from a five-year high of 43.30 on February 3, after Standard & Poor's raised India's foreign currency rating to a notch below investment grade, on sustained dollar purchases by state-run banks.
State-run banks, which often act on behalf of the central bank, have been buying dollars for the past five trading sessions to rein in the rupee, which analysts say is overvalued by nearly 3.5 percent on a trade-weighted basis.
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