The Indian rupee recouped most of the session's losses to end just a trifle weaker on Monday, helped by the new reformist finance minister's commitment to keep up the pace of economic reforms and contain the fiscal deficit.
The rupee ended at 45.3250/3350 per dollar, barely weaker than Friday's close of 45.2900/3100 after having recovered from a session low of 45.39 struck amid corporate demand for dollars in the morning.
"Volumes were thin today, with both dollar supplies and demand not very strong and the finance minister's comments about encouraging private investment and promoting growth helped sentiment," a dealer at a state-run bank said.
Earlier in the day, India's new finance minister, P. Chidambaram, told a news conference he would continue economic reforms to keep Asia's third-largest economy on a growth path and added his government was committed to fiscal responsibility.
Traders expect his comments to help soothe frayed nerves among local and foreign investors, who had been worried last week that a leftist-backed coalition may back-pedal on several reforms.
Indian stock markets cheered Chidambaram's appointment, with the benchmark Bombay index ending 3.3 percent higher.
Traders are now waiting for the coalition government's detailed economic agenda to see how Prime Minister Manmohan Singh, who launched the country's first wave of reforms in 1991, and the Harvard-educated Chidambaram steer the economy.
Fears of a slowdown in reforms had surfaced when leftist parties supporting the new government indicated their resistance to privatisation, triggering a sell-off in shares a week ago.
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