The Indian rupee retreated from near six-month highs on Monday afternoon after reports of fresh border tensions with China came to light, said traders.
India said it had foiled an attempt by Chinese troops to change the status quo on their disputed and ill-defined border in a fresh flare-up between the two nuclear-armed countries.
The partially convertible rupee was trading at 73.62/63 per dollar by 0707 GMT, compared with its previous close of 73.39 on Friday and much weaker than the 73.25 level hit earlier in the session - its strongest since March 5.
"We have seen sharp gains in the rupee last week and early today, so the fresh round of border issues meant an immediate sell trigger for most," a trader with a private bank said.
Earlier in the day, the rupee gained tracking losses in the dollar and a rise in Asian peers. The dollar was poised to register its fourth straight monthly drop in August.
Traders said month-end dollar demand from importers also weighed on the rupee and that the local currency could continue to see a 73-73.80 range in the absence of dollar buying intervention by the central bank.
The June-quarter GDP data due to be released at 1200 GMT is being closely monitored for further direction. According to a Reuters poll, India's economy contracted 20% in the first quarter of 2020/21, its worst performance in decades.
