The rupee ended higher on Tuesday, after the federal budget raised the cap on foreign investment in debt and renewed a push for fiscal prudence, moves that could eventually lead to a ratings upgrade, dealers said.
The budget was seen by traders as supporting growth, and they said it could boost the rupee with foreign investors expected to pump more money into the country's stock market.
The rupee had briefly come under pressure earlier in the day after the government announced a higher tax on securities transactions, dampening sentiment among stock market investors.
The partially convertible ended at 44.3750/3825 per dollar, up 0.26 percent from Monday's close and moving further away from last week's 7-week trough at 44.65 per dollar. "The view on the rupee is positive after the budget," said Pravesh Malhotra, a trader at Centurion Bank.