The Indian rupee stabilised on Thursday, edging away from the previous day's three-year low as the market judged it had fallen far enough for now. The partially convertible rupee ended barely changed at 46.34/35 per dollar compared to Wednesday's close of 46.35/36 but was above its three-year low of 46.57.
"There was good selling of dollars as everybody perceived the worst to be over. A software maker and a large company were active sellers (of dollars)," a dealer with a private bank said. Dealers said however dollar buying by custodial banks and gains in the US currency overseas prevented the rupee from sustaining intraday highs around 46.23.
Custodial banks trade in the market on behalf of foreign funds, which have been pulling money out of Indian equities in recent weeks. The trade-weighted value of the rupee has dropped in the past month to stand about 1.5 percent overvalued, according to J.P. Morgan's currency index, from about 5 percent overvalued a month ago.