The rupee recovered from a two-week low to end steady on Tuesday, on strong foreign fund inflows into local stocks, but sentiment was wary before an expected Federal Reserve interest rate increase later in the day. Dealers said a shortage of cash dollars and near-record-high oil prices also weighed on the rupee and limited gains.
The rupee ended at 43.5450/55 per dollar, off an intra-day low of 43.59 - its weakest since July 26 - and little changed from Monday's 43.5475/5525.
"There was an initial bout of dollar-buying, mostly oil-related. But that eased later in the day and fund inflows were also strong, helping the rupee to recover," said a dealer at a foreign bank.
Foreign investors have ploughed more than $7 billion into India's stock market so far this year, after investing about $8.5 billion in 2004. US light sweet crude was 19 cents down at $63.75 a barrel at 1145 GMT, having soared to a new high of $64.27 as traders worried a nuclear stand-off with Iran and possible militant attacks in Saudi Arabia could disrupt crucial Middle East exports.
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