At 2:40 p.m. (0910 GMT), the rupee was at 49.08/09 to the dollar, close to the day's high of 49.0750.

The unit slid to 49.2125 after opening at 49.0800. It closed at 49.2150/2250 on Monday.

India imports about 80 percent of its oil requirements and oil companies are the biggest buyers of dollars in the local currency market.

Oil refiners have scaled up their dollar buying in the past few days as global oil prices come under pressure due to rising tensions between Iran and the United States. For stories on oil, see

However, the rupee is being supported by strong dollar inflows and expectations of intervention by the central bank in the foreign exchange market in case the currency slides sharply, traders said.

Foreign funds have poured more than $11 billion into local equities and debt so far in 2012.

India's benchmark share index was up more than 1.6 percent, as investors scooped up bargains, after the market fell 5.3 percent over four sessions. The index has gained nearly 15 percent since end of December.