MUMBAI, June 2 (Reuters) - The Indian rupee backed away on Tuesday from a more than five-month peak reached in the previous session, as the dollar recovered some of its steep losses versus major currencies.
At 9:40 a.m. (0410 GMT), the partially convertible rupee was at 47.16/17 per dollar, 0.5 percent weaker than its close of 46.94/95 on Monday when it rose during trade as high as 46.89, its strongest since Dec. 19.
"The rupee has opened slightly weaker because of the dollar movements overseas. Sell upticks until the central bank is seen around, would be the strategy," said Ashtosh Raina, chief foreign exchange dealer with HDFC Bank.
"The direction for the dollar-rupee is still lower, it is likely to trade in a 46.80 to 47.20 band today," he added.
The dollar steadied on Tuesday, a day after hitting its lowest this year against the euro and a basket of currencies as reassuring economic data and a rally on Wall Street reduced the safe-haven allure of the greenback. [USD/]
Dealers said heavy central bank intervention between 46.90-47 on Monday had stemmed the rupee's rise and was keeping traders cautious. Three traders estimated the central bank had purchased about $400 million to $600 million in Monday's trading.
The central bank has previously said it buys or sells dollars in the market to prevent excessive volatility in the rupee.
Traders said they would be watching the domestic sharemarket for cues on the direction of fund flows.
Indian shares .BSESN may open higher, a day after a slew of manufacturing data boosted hopes the world economy is stablizing, but trading could be choppy as investors book profits on an 84 percent rally since early March. [.BO]
Foreigners have pumped a net $4.4 billion into local shares so far in 2009, after having pulled out a record of more than $13 billion last year.
One-month offshore non-deliverable forward contracts PNDF were quoting at 47.20/30, weaker than the onshore spot rate.
