The rupee rose slightly on Friday, ending a two-day losing streak after suspected intervention by the Reserve Bank of India, although broader sentiment remains weak due to renewed fears the Federal Reserve will soon start scaling back its stimulus.
Trading in the rupee has been volatile, starting the week with strong gains on hopes that the Fed would delay any tapering, only to falter as the week progressed as doubts about the US central bank's stance then crept in.
Overall, the rupee managed to post a weekly gain against the dollar and snap a five-week losing streak, although without much conviction.
In particular, traders are concerned foreign investors are losing interest in India, setting up the prospect of more falls in the rupee at a time when state-run oil companies are back to sourcing dollars in markets and not through a special swap window that had been created by the central bank.
Foreign institutional investors sold shares worth 598 million rupees on Thursday, snapping a 32-day buying streak that totalled 238.84