<div>The rupee saw its steepest fall in two weeks on Tuesday as investors preferred to take profits on their long rupee positions ahead of the U.S. Federal Reserve's two-day policy meeting outcome due to be released on Wednesday.</div><div> </div><div>Although the anticipated trimming of the Fed's massive bond purchases has caused some apprehension, markets expect a much longer road to rate hikes after former Treasury secretary Lawrence Summers dropped out of the race to become its next chief.</div><div> </div><div>The outcome of the Fed's meeting will be a key determinant of what the Reserve Bank of India chooses to do at its monetary policy review on Friday.</div><div> </div><div>With growth languishing at a decade-low and inflation remaining sticky, the new central bank governor will have a tough task at hand.</div><div> </div><div>"There was profit taking seen today ahead of the FOMC but good dollar selling by custodian banks helped," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with Andhra Bank.</div><div> </div><div>"I expect the Fed to taper by a maximum of $15 billion and that is already discounted by the market. I see the rupee rising to 61 to a dollar by end-September as hopes from Rajan are high," he added, predicting a range of 62.50 to 64.20 until the policy on Friday.</div><div> </div><div>The partially convertible rupee closed at 63.37/38 per dollar compared with 62.83/84 on Monday. The unit dropped 0.85 percent on the day, its biggest single-day fall in two weeks. It moved in a wide range of 62.95 to 63.6450 during the session.</div><div> </div><div>Traders said despite the stock market having been choppy the dollar sales seen from custodian banks helped pull the rupee off the day's lows.</div><div> </div><div>The BSE Sensex rose on Tuesday, although on its lowest volume in nearly 1-1/2 months, led by gains in technology shares that were aided by a weak rupee and attractive short-term valuations due to the recent underperformance of the sector.</div><div> </div><div>Most other Asian currencies also weakened versus the dollar.</div><div> </div><div>In the offshore non-deliverable forwards, the one-month contract was at 64.04 while the three-month was at 65.26.</div><div> </div><div>In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 63.46 with a total traded volume of $2.72 billion.<br /><br />(Reuters)</div>
