The rupee ended steady on Thursday near the previous day's 10-month low, taking a breather from three straight days of losses as the dollar declined overseas and oil prices eased to two-month lows.
The partially convertible rupee ended at 44.28/2850 per dollar, barely changed from Wednesday's 44.28/29, which was the weakest close since December 10.
It had shed nearly 0.6 percent in three sessions due to heavy demand for dollars for oil and defence import payments. "That dollar demand was not seen today," said a senior foreign exchange dealer at a foreign bank. "Dollar supplies were not good but it matched whatever little demand was seen in the market."
On Wednesday, the rupee pulled back from a low of 44.3450 after central bank deputy governor Rakesh Mohan expressed concerns about exchange rate volatility. Speaking about the central bank's overall currency management policy he said: "We intervene to provide stability."
Traders said his comments meant the central bank would support the rupee if it lost ground rapidly.
The rupee has broadly stood its ground for most of the year, in the face of high oil prices and the rebounding dollar, as foreign funds have pumped $8.6 billion into Indian equities on hopes economic growth would bolster corporate earnings.
Latest data shows foreign funds bought $96.6 million worth of shares on Tuesday when the 30-share BSE index climbed 1.2 percent to a record closing high of 8,799.96 points.
But shares fell 2.24 percent on Thursday, tracking other markets on signs of rising US interest rates and concerns about weakness in the world's largest economy.
The dollar has had a strong week, hitting 16-month highs against the yen and three-month peaks versus the euro and putting pressure on the rupee.
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