The Indian rupee erased its early morning losses against the dollar in late trading Tuesday as the latter lost ground versus the euro in offshore deals despite some political concerns surrounding the eurozone.
Recovery in domestic equities from a fourth straight session drop in the morning after data showed that India's service sector expanded at the fastest pace in a year also supported the rupee gains.
A survey by Markit Economics and HSBC Bank showed that the seasonally adjusted HSBC Services Business Activity Index rose to 57.5 in January from 55.6 in the previous month.
Shares were down in the morning as apprehensions about the outcome of the forthcoming elections in Italy and a growing corruption scandal in Spain brought Europe's woes back in focus.
The benchmark BSE Sensex ended the session down 91 points or 0.46 percent at 19,660, while the broader Nifty index fell by 30 points or 0.51 percent to 5,957.
The rupee touched 53.0755 against the dollar, up almost 0.6 percent from a 4-day low of 53.3955 hit in the initial hours of the domestic trading. The pair closed yesterday's deals at 53.2905.
On the upside, the rupee is poised to extend its advance towards a major resistance zone of 51.20/80. The near-term upside target for the rupee is seen around the 52.90 level.
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