The rupee appreciated by three paise to close at one-week high of 60.81 against the US dollar in the previous session on sustained dollar selling by exporters and capital inflows.
Investors turn cautious ahead of upcoming budget
In New York Market, the US dollar rose against the Australian dollar on Tuesday as gold futures dropped more than two per cent and investors anticipated Chinese data that is likely to show a slowing of growth.
The partially convertible rupee closed at 61.2350/2450 per dollar compared with 61.31/32 on Tuesday.
Forex dealers attributed the rupee's fall to increased demand for the US currency from importers and a lower opening in the domestic equity market.
Increased selling of the dollar by banks and exporters amid sustained foreign capital inflows supported the rupee.
Traders are now focussed on the upcoming November trade data, due sometime this week, for near-term direction, with consumer inflation data due out on Thursday, which will help set expectations ahead of the Reserve Bank of India's policy review on December 18.
Anandabazar Patrika reported that Rajan would prefer to go back to the United States after his three-year term expires in early September
The rupee had lost 15 paise to hit two-week closing low of 60.68 against the dollar in yesterday's trade on consistent demand for the US currency from importers and some banks on strong global cues.
The rupee had lost 26 paise to close at 60.16 against the dollar yesterday on fresh dollar demand from banks and importers in view of the US currency gaining overseas and weakness in local equities.
However, FII outflows of Rs 545 crore (Rs 5.45 billion) capped the gains in the rupee, which had slumped by 126 paise in past two days.
The rupee had hit an intra-day low of 61.6750 on Friday, its lowest level since Oct. 17.
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Sentiments turned buoyant after RBI on Monday cut the marginal standing facility rate, at which it lends emergency funds to banks, by 0.5 per cent to 9 per cent with an aim to improve liquidity and boost economic activities.
The rupee had dipped by a massive 67 paise to an all-time closing low of 61.10 against the dollar on Friday.
India has asked refiners that owe about $6.5 billion to Iran for oil imports to build up dollar and euro balances to avoid downward pressure on the rupee if six world powers and Tehran reach a final nuclear deal.
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The partially convertible rupee closed at 66.24/25 per dollar after hitting a record low of 66.30, and down 2.9 per cent from its close of 64.30/31 on Monday.
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