The inflows have helped overshadow concerns about the country's twin deficits, on the current and fiscal accounts, sparking a recovery in the rupee from its record low of 57.32 hit in late June. The partially convertible rupee closed at 54.8350/8450 per dollar versus its Monday close of 54.95/96, after touching an intraday high of 54.8050, its best level since December 20.
In the offshore non-deliverable forward market, the one-month contract was at 55.15 while the three-month was at 55.69. In the currency futures market, the most-traded near-term dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange closed at around 54.89 with a total traded volume of $5.75 billion.
Volumes were thin, reflecting trading in global currency markets, which remained sluggish, after most global financial centres were closed for Christmas on Tuesday. Globally, the yen continued to remain in focus with the Japanese unit sliding to a 20-month low in Asian trade as Shinzo Abe assumed Japan's helm with a mandate to weaken its currency and push for more drastic monetary and fiscal stimulus.