With few domestic factors at play, the rupee remains stuck in a broad range, with support from overseas investors who were net buyers of Indian shares worth $40.62 million on Monday, marking their fourth consecutive session of inflows.
Appetite for debt also remains robust, with foreign investors buying $132.01 million worth on Monday, taking total inflows so far this year to $12.59 billion. The sale of the foreign investor limits on Monday also saw strong demand.
But traders also say oil-related dollar demand is capping broader gains in the rupee, while a stand-off between Russia and the West also continues to spark uncertainty in global markets.
"Foreign exchange market continues to remain in a range. Some participants believe geo-political tensions can change the trend, but I don't see much of a change in the domestic market situation in the near-term," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank.
"I expect the rupee to remain in a 59.80 to 60.80 range over the next month," he added.
The partially convertible rupee closed at 60.24/25 per dollar compared with 60.30/31 on Monday. The unit moved in a tight range of 60.18 to 60.2850 during the session.
Traders will continue to monitor moves in other Asian currencies for clues in the near-term. Most Asian currencies pushed higher on Tuesday. See
Asian stocks touched a three-year peak on Tuesday, despite lingering concerns about crises in Ukraine and Gaza, while the yen eased against the dollar and the euro.
In the offshore non-deliverable forwards, the one-month contract was at 60.50 while the three-month was at 61.01.