MUMBAI (Reuters) - The rupee hit a near three-week low and weakened for a fourth consecutive session on Tuesday as the central bank was spotted buying dollars to curb gains in the currency while importers' buying also added to the losses.
The rupee had briefly strengthened early in the day when the Reserve Bank of India kept interest rates steady and signalled it may be done with rate hikes. The ensuing optimism about growth helped offset some of the expected benefits from higher interest rates on the rupee.
Traders expect the rupee to remain in a range until the government unveils its budget, likely in early or mid-July.
"INR looks rangebound for now since capital flows and current accounts are well balanced. One needs to watch global risk appetite very closely," said Samir Lodha, managing director at QuantArt Market Solutions, adding that he expects the pair to be in a range of 58.50 to 60.0 until the Budget next month.
The partially convertible rupee closed at 59.3850/3950 per dollar after falling as low as 59.42, a level last seen on May 15. The pair had closed at 59.1525/1625 on Monday.
The rupee fell even though local shares rose to a record close as metal firms surged after surveys showed China's factory and services sectors had their best performance in months.
Traders cited little impact from the central bank's move to allow banks to equally spread out additional provisioning on unhedged foreign currency exposure in the current fiscal year.
In the offshore non-deliverable forwards, the one-month contract was at 59.70 while the three-month was at 60.28.
Editing by Subhranshu Sahu