The Indian rupee edged higher in late trade on Tuesday in line with the euro, which erased earlier losses, while gains in domestic shares and dollar inflows towards Power Grid Corp's share sale also helped. The partially convertible rupee closed at 44.31/32 per dollar, 0.15 percent above the 44.38/39 close on Monday. The unit traded in the range of 44.31 to 44.4350 during the session.
"Today was mostly calm before the storm. Market is expecting a rate hike in China sometime soon, not sure when," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank. The one-year onshore dollar premium closed at 249.75 points, off the day's high of 255 points but still above its previous close of 246.50 points.
India's central bank on Tuesday reintroduced recent measures to provide liquidity comfort to banks, arising out of the frictional liquidity pressure. One-month offshore non-deliverable forward contracts were at 44.56, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange closed at 44.5050, 44.5025 and 44.5050 respectively, with the total traded volume on the three exchanges at a low $5.3 billion.