The rupee strengthened on Tuesday from a seven-week trough reached in the previous session, as broadly higher Asian peers lifted sentiment despite early losses in the domestic sharemarket.
At 10 am (0430 GMT), the partially convertible rupee was at 46.7172, 0.2% stronger than its close of 46.8384 on Monday.
"The market was bit long dollar and in the absence of extremely negative factors, the path of least resistance is towards a stronger rupee in these times," said RK Gurumurthy, head of treasury, at ING Vysya Bank.
"I still see support for the dollar around 46.65 and a move higher in the days to come -- may not be today though. Above 46.85, we hardly see any major hurdle until 47.40, but the psychological 47 figure will be a token resistance," he added.
Dealers said they expected the rupee to move in 46.65-46.85 range during the session. Most Asian units were marginally stronger compared to the dollar.
The euro inched up against the dollar on Tuesday but remained within sight of an 8-½month low hit last week, dogged by persistent worries about the fiscal health of some euro zone countries.
Indian shares fell 0.3% early before turning positive, but the debt worries in Europe kept investors cautious.
One-month offshore non-deliverable forward contracts were quoted at 46.7383, little weaker compared to the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both at 46.7525, with the total traded volume on the two exchanges at about $610 million.
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