The Indian rupee rose on Thursday for a second straight day, underpinned by robust inflows into a rallying stock market and lower crude oil prices which are expected to help ease the current account deficit, dealers said.
The rupee, which analysts say is overvalued by nearly 7 percent on a trade-weighted basis, ended at 45.61/62 against the dollar, 0.1 percent higher than the previous close of 45.64/65. It gained 0.3 percent in the previous session.
"There were good FII (foreign institutional investor) inflows and along with softer oil, the rupee rose to a high of 45.55," said a senior forex dealer at a US bank. "But then we had some demand from importers and (dollar) short covering before close which dragged it off highs."
Traders said they would eye US trade data expected to be released later on Thursday, as well as India's trade gap numbers which are likely to be released in the next few days, for direction in the short term.
India posted a trade deficit of $3.49 billion in August, compared with a deficit of $3.81 billion in the same month a year earlier and $3.97 billion in July this year.
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