MUMBAI: The Indian rupee was firmer on Tuesday, cheering the big gains in local equity markets that were lifted by a strong growth outlook for the economy and the dollar's weakness overseas.
Movement in global crude oil prices would be eyed for more cues on the direction of the domestic currency, traders said.
At 10:44 am, (0514 GMT), the partially convertible rupee was at 45.1225/1350 per dollar against Monday's close of 45.27.
Intraday, the local unit is seen in a 45.10-45.30 range. "Rupee's movement so far today has been primarily based on the rise in the domestic equity market," said a foreign exchange dealer at HDFC Bank .
Indian shares were up more than 1 percent in early trade on Tuesday tracking firm Asian equities, and after the finance minister said he expects Asia's third-largest economy to grow by nearly 9 percent in the next fiscal year.
The selling presssure on the dollar and gains in most Asian currencies also helped Indian unit, traders said.
"Some fund based selling of the U.S. dollar is taking place across Asian markets, and rupee is following suit," said a foreign exchange dealer at a foreign bank.
The dollar struggled to regain its footing in Asian trade after a steep decline, while the euro held firm as investors bet the Federal Reserve will stick to its easing course even as the ECB talks of tightening.
The index of the dollar against six major currencies was up 0.1 percent at 76.951 points. On Monday, at the end of local forex trade, the index had been at 76.877.
The one-month onshore forward premiums were at 26.25 points against 27.25 points on Monday, while the one-month offshore non-deliverable forward contracts were quoted at 45.40, weaker than the onshore spot rate.
Oil is India's biggest import and state-run oil refiners are the largest buyers of the dollar in the domestic currency country.
Brent crude held steady near $112 a barrel on Tuesday as investors remained cautious about Middle East supplies even as Saudi Arabia ramped up production to cover a drop in Libyan exports.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and on the United Stock Exchange were all at 45.3475, with the total traded volume at about $1.71 billion.
