The rupee pulled back from the day's low Tuesday, buoyed by gains in the euro, although defence-related dollar buying and local share losses pinned it in negative territory.
The partially convertible rupee ended at 52.0150/0250 per dollar, 0.12 weaker than its 51.9550/9650 previous close, after touching the day's low of 52.13.
The rupee could touch 51.80 tomorrow if the euro holds on to its gains overnight, said Panchadev Negi, deputy manager of forex dealing at State Bank of Travancore. But we are expecting good bids that will prevent the rupee from appreciating further.
The euro jumped against the dollar Tuesday after Italy managed to sell government bonds to the market even as it was forced to pay high yields on them. The euro was trading at $1.3414 at the end of local trade, compared with its $1.3370 previous close, while the index of the dollar against six major currencies was at 78.624 points versus 78.884 previously.
After the rupee depreciated to all-time low of 52.73, it is consolidating between 51.70 to 52.50, said Ashish Barua, a senior forex dealer with IndusInd Bank.
The rupee hit its record low on Nov. 22 and has been the worst performer among the Asian currencies in 2011.
Earlier in the day, software exporters selling dollars had aided the Indian unit, traders said. Dealers will also be keenly awaiting outcome of the euro zone finance ministers meeting where they are to agree on the details of bolstering their bailout fund to help prevent contagion in bond markets.
The one-month offshore non-deliverable forward contracts were quoted at 52.35. The one-month onshore forward dollar premium was at 29.25 points from 27.50 on Monday, the three-month was at 63.50 points from 63, and the one-year premium was at 164.25 points, from 162.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange were at 52.2825, while those on the MCX-SX and the United Stock Exchange were both at 52.2850. Total volume was at $3.91 billion.