The rupee gained on Tuesday as softening global oil prices calmed worries of a widening trade deficit but a subdued outlook for stocks kept traders uneasy about foreign flows.
At 9:11 a.m., the partially convertible rupee was at 42.90/91 per dollar, a shade stronger than 42.945/955 on Monday. It hit a 13-month low of 43.21 in late May.
Asian stocks edged lower on Tuesday after oil prices surged to a fresh record overnight, fuelling fears that higher inflation will sap consumer demand and business investment around the world.
Foreigners have been net sellers of $5.6 billion rupees worth of Indian stocks so far in 2008, helping push the rupee down more than 8 percent. They had bought a record $17.4 billion last year when the rupee rose more than 12 percent.
India's main stock index rose 1.4 percent on Monday to its highest close in more than a week as investors picked up beaten-down stocks such as financials.