Reuters Market Eye - The rupee rises from a session low of 60.2450 to trade at 60.09/60.10, as gains in shares help offset dollar demand from state-run banks. It closed at 60.07/60.08 on Monday.
State-run banks have been mopping up dollars for oil- and defence-related payments in the recent sessions, aiding the greenback.
Some of this demand could be for the government's effort to pay Iran a part of its oil dues, dealers say.
India paid a second instalment of $550 million in oil dues to Iran last week under an interim deal that has allowed Tehran access to $4.2 billion in blocked funds globally, Reuters reported last week.
The Nifty up 0.3 percent, heading for its first daily rise in six sessions as interest rate-sensitive stocks gain after June consumer inflation slowed to the lowest since figures were first published in January 2012.
(gaurav.pai@thomsonreuters.com; Reuters Messaging: gaurav.pai.thomsonreuters.com@reuters.net)