Rupee falls for 3rd day; importers buy dollars

The rupee touched its lowest level in a week on Tuesday after falling for a third consecutive session as dollar demand from largely oil importers and broad dollar short-covering offset inflows tied to the gains in domestic shares.

Some traders speculated that the Reserve Bank of India bought dollars in spot markets to prevent a one-way movement in the pair, but state-run banks who usually act on behalf of the central bank were not sure whether that had been the case. The rupee closed at 52.72/73 per dollar versus its previous close of 52.64/65, after hitting a session low at 52.83, lowest since October 1.

The rupee had strengthened for five straight weeks until Friday, gaining a total 7.1 percent on the back of India's slew of fiscal and economic reforms and stimulus measures from global central banks. The one-month non-deliverable offshore contract was trading at 52.88 while the three-month was at 53.35.

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