MUMBAI: The rupee strengthened on Tuesday, backed by a firmer sharemarket and higher regional peers, but the dollar's rise versus some major currencies was expected to contain its upside. At 10:33 am. (0503 GMT), the partially convertible rupee was at 46.79/80 per dollar, 0.1 per cent above its previous close of 46.84/85. It had hit 46.97 during trade last Thursday, its lowest since November 27. "Trading is thin due to the year-end, but overall there is some dollar short-covering which could push the rupee towards 47.00-47.20 levels over the next week or so," a senior dealer with a private bank said. "Today it is likely to trade in a 46.75-85 range, but month-end (dollar) demand would slowly pick up and weigh on the unit." The dollar hovered close to its highest in more than three months against the euro and more than a month against the yen, supported by year-end unwinding of short positions in the greenback and a rise in US Treasury yields. Most Asian units were also stronger compared to the dollar. Dealers were watching the sharemarket for cues on foreign fund flows. Shares were up 0.6 per cent in early trade on Tuesday, led by gains in ICICI Bank and Reliance Industries and tracking firm Asian markets. One-month offshore non-deliverable forward contracts were quoted at 46.80/90, marginally weaker than the onshore spot rate. In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX were quoting at 46.8325 and 46.8300 respectively, with the total traded volume on the two exchanges at about $900 million.

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