The rupee slipped from a one-week high on Thursday on suspected central bank intervention, but managed to make modest gains on the day as the US currency eased overseas, with steady foreign inflows also lending support.
Traders said dollar inflows had bunched up during a holiday on Wednesday and stronger regional currencies also bolstered the rupee, which analysts say is overvalued by nearly 9 percent on a trade-weighted basis.
The partially convertible Indian currency ended at 44.4250/4350 per dollar, 0.1 percent higher than Tuesday's close of 44.4700/4800. It touched 44.39, according to Reuters data, which was its highest level since March 8.
"There were some dollar purchases by state-run banks, which we suspect was for the central bank, at around 44.39 levels," said a trader at a foreign bank. "There was also some demand from offshore investors which pulled the rupee down."
The central bank intervenes in India's foreign exchange market through state-run banks to curb excessive swings and also keep exports competitive, analysts say.
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