Rupee ended tad weaker ahead of Fed meet

The rupee ended slightly weaker on Tuesday, recovering from a nearly two-week low hit earlier, as oil importers stepped up dollar purchases ahead of the end of the month, while overall sentiment was cautious ahead of the US Federal Reserve's policy meeting.

The rupee is still headed for a monthly gain in October, having been supported by continued foreign flows into the debt and stock markets and the announcement of several government reforms, including in the prices for diesel.

Analysts say global factors are likely to be the most important factor for the rupee in the near term.

The Fed is likely to announce an end to its massive bond-buying stimulus, while simultaneously assuring it will wait a long while before raising interest rates at the end of its two-day policy meeting ending Wednesday.

"On INR, even though the domestic economy is doing well, we continue to perceive significant risk going forward and INR may touch 64.00 sometime between now and March 2015," said Samir Lodha, managing director at QuantArt Market Solutions.

"The exact timing of the move is difficult to predict but the move will likely be driven by a global risk-off triggered either by a hawkish stance from the Fed or a further slowdown in global growth."

The partially convertible rupee closed at 61.32/33 per dollar, weaker from its Monday's close of 61.30/31.

The rupee earlier hit an intraday low of 61.41 to the dollar, its weakest since Oct. 17, due to dollar purchases from some banks tied to demand from oil importers, traders said.

During the session, some state-owned banks also stepped up defence-related dollar purchases, traders said.

In the offshore non-deliverable forwards, the one-month contract was at 61.57, while the three-month contract was at 62.17.