The Indian rupee reversed gains after strengthening to its highest level in more than five-and-half months on Monday, as the dollar gained against majors and stocks came off highs.
At 1:50 p.m., the partially convertible rupee was at day's low of 44.53/54 per dollar, after hitting 44.2525, its highest since April 15 and 0.4 percent above Friday's close of 44.47/48.
The dollar surged higher on Monday in a short-covering rally against the yen, which retreated against other currencies as investors unwound some long yen positions ahead of a Bank of Japan policy meeting this week.
The index of the dollar against six majors was up 0.4 percent and would be watched for direction.
Indian shares were up 0.4 percent after climbing over 1 percent to their highest in 33 months, boosted by surging foreign interest.
Dealers expect the rupee to move in 44.40-44.60 band in rest of trade.
However, most Asian currencies were trading stronger versus the dollar despite intervention.
Dealers said there was no intervention in the Indian foreign exchange market by the central bank.
One-month offshore non-deliverable forward contracts were quoted at 44.64, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were all at 44.7050, with the total traded volume on the three exchanges at about $2 billion.
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