The spot rupee ended at 153.30/40 per dollar, compared with Monday's close of 153.55/60.

"Demand (for the dollar) is not there as seasonal imports have finished ... oil demand is also not there," said a currency dealer, adding that the dollar demand has slightly waned, lending support to the rupee.

"The year-end inward remittances are helping the rupee to strengthen."

The rupee has lost 2.5 percent so far this year.

The market has been waiting for more clarity over a foreign exchange management act introduced by the government last month.

Central Bank Governor Indrajit Coomaraswamy said the new act would decriminalise offences related to foreign exchange trading and impose fines instead.

The government, in its 2018 budget, imposed new taxes on high-end vehicles, telecoms, banks and liquor in a bid to boost revenues.

Foreign investors bought equities net worth 18.8 billion rupees ($122.64 million) this year, as of Tuesday's close. They bought government securities net worth 49.2 billion rupees as of Nov. 29, official data showed.