Mumbai: The rupee recovered from early losses on Tuesday, with a section of the market buying the local unit anticipating capital inflows, though concerns about a reversal in risk appetite among overseas investors persisted.
“There’s a bit of confusion about the rupee’s next move, and that’s reflected in the fact that the pair is not moving around much,” said a dealer with a foreign bank.
India’s benchmark share index was weaker in early trade, taking cues from Asian share markets that fell after US credit card firms and banks were downgraded, stoking fears their troubles could spread to the global sector.
On Monday, the Dow Jones Industrial Average and Nasdaq Composite index shed roughly 1% each.
The dollar was little changed as investors await other key central bank decisions this week and more US data for clues about whether the economy is falling into recession that may require more sharp Federal Reserve rate cuts.
Local dealers also watched for more capital outflows stemming from rebates of recent local initial share offerings.
Last month Reliance Power, a unit of Anil Dhirubhai Ambani group, raised a record $3 billion through an initial share sale that generated sizeable foreign interest, and dealers said refunds worth $2 billion had left India so far.