The rupee ended steady on Tuesday, side-stepping a rally in the dollar against other majors, with the currency drawing support from robust foreign capital inflows into the booming Indian stock market. The inflows also helped limit concerns caused by a widening trade deficit in Asia's third-largest economy, expected to expand at 7 percent this year, dealers said.
The rupee, which analysts say is overvalued by 10 percent on a trade-weighted basis, ended at 43.5400/5450 per dollar, compared with Monday's close of 43.5450/55. It had hit a near-two-week peak of 43.4975/5075 on July 12.
"There was demand from oil importing companies and some interbank bids for dollars as the greenback rose overseas," said a chief dealer at a private sector bank. "But the follow-through demand was not there and hence there was some long liquidation of dollars towards close."