The rupee recovered sharply from record lows on Tuesday afternoon, as three dealers cited dollar sales by state-run banks on behalf of the central bank.

However, they said the size of intervention from the Reserve Bank of India did not seem too large, with the steep recovery in the rupee being exaggerated by illiquid

conditions in currency markets.

The partially convertible rupee was trading at 58.47/48 per dollar at 2:04 p.m., off a record low of 58.98 hit earlier in the day, but still weaker than its close of 58.15/16 on Monday.

Traders said the rupee was also supported by speculation that May wholesale inflation due this week may show continued easing and media reports the government was considering a special bond sale for non-resident Indians.