The rupee closed at 60.76/77 on Tuesday.
Offshore rupee debt was likely to attract good demand
The Reserve Bank of India (RBI) is expected to hold its policy interest rate at 6.75 per cent next week to stifle inflation.
The repo rate has been unchanged since January, when the RBI increased it by a quarter percentage point.
After hitting a record low of 68.85 to the dollar last week, a Reuters poll suggests the rupee will stabilise at 66 to the dollar by the end of September, while technical charts also point to a period of relative calm.
The RBI cut rates for third time in 2015 due to favourable economic conditions.
The RBI cited lower-than-expected inflation, weak crude prices and weak demand, as well as the government's commitment to sticking to a fiscal deficit target as reasons.
Since mid-July, the RBI has taken steps to tighten cash conditions, which have failed to support the rupee but sent bond yields surging, posing a fresh threat to the already cooling economy.
The Reserve Bank of India cut its repo rate by 25 basis points to 6.50 per cent.
The cutback on export credit refinance facility is another step towards a shift away from sector-specific liquidity allocations.
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