MUMBAI: The Indian rupee gained on Tuesday, supported by strong Asian peers and the dollar's weakness against major currencies, while traders said demand for the greenback from oil importers is likely to cap gains in the rupee.
At 10:26 a.m. (0456 GMT), the partially convertible rupee was at 44.3225/3250 per dollar, 0.2 stronger than Monday's close of 44.3950/4050.
Traders expect the rupee to trade in a range of 44.25-44.38 .
"The dollar is weaker all over the world, and it looks it will weaken more against the rupee," a trader with a state-run bank said.
The dollar hit a record low against the Swiss franc and a four-month trough versus the yen on Tuesday, after a speech by US President Barack Obama gave no sign a deadlock in Washington over raising the debt limit was easing.
The index of the dollar against six major currencies was down 0.50 percent at 73.693 points. It was at 74.096 when the rupee closed on Monday.
The euro was at $1.4476 compared with $1.4374 at the close of local forex market on Monday.
Most Asian currencies were stronger against the dollar.
Dealers expect dollar demand from oil importers, who are the largest buyers of the US unit in the domestic market, to limit the rupee's rise. Oil -- India's largest import item -- held steady on Tuesday.
Traders are now will also look for cues from local shares. which treaded water as investors awaited cues on the rate outlook from the central bank's policy at 11 a.m. (0530 GMT).
The one-month onshore forward premium was at 24.50 points from 25.25 points on Monday, while the three-month was at 71.50 points from 72.25 points and the one-year was at 236 points versus 233.25.
One-month offshore non-deliverable forward contracts were quoted at 44.46, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX were at and the United Stock Exchange were all at 44.3300. The total volume stood at $14.8 billion.
Copyright Reuters, 2011
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