The Indian rupee edged up against the dollar on Tuesday as local share prices ended higher but dealers said deceleration of fund flows from foreign investors could again see the rupee easing towards this week's 2006 low.
The partially convertible rupee ended at 45.53/54 per dollar, firmer than Monday's close of 45.55/57 and further above its 45.82 low for the year also set on Monday when the stock market staged a 10-percent intraday fall.
Dealers said a rebound in shares on Tuesday boosted confidence and encouraged banks to sell dollars but then corporate dollar buying set in.
"The rupee found resistance around 45.48. There was a lot of (dollar) buying, which took place at this level," said a dealer with a private bank.
Foreign inflows into the stock market have provided key support to the rupee this year and traders are nervous any ebbing in flows will leave the currency more vulnerable to downward pressure from a widening trade deficit.