USD/INR had hit a one-week high on Monday after Finance Minister P. Chidambaram promised forthcoming fiscal consolidation steps.
However, the Indian currency rebounded tracking a dip in the euro as traders also focused on potential ECB steps.
Some oil-related USD buying is also seen, though traders say flows are not as consistent as Monday.
A dealer at a foreign bank tips USD/INR to trade at 55.25-55.55 band for the session.
Copyright @ Thomson Reuters 2012