The Indian rupee hovered in a tight range on Tuesday, ending little changed against the U.S. dollar, as likely intervention by the central bank offset local demand for the greenback.
The rupee ended at 83.3825 against the dollar, barely changed from its close at 83.3650 in the previous session.
The Reserve Bank of India (RBI) sold dollars near the start of the spot trading session and also intermittently stepped in during the day, traders said.
Meanwhile, importers, including local oil marketing companies, were seen bidding for dollars on Tuesday, a foreign exchange trader at a state-run bank said.
The dollar index was steady at 103.6 while Asian currencies were mostly lower between 0.1% to 0.6%.
The offshore Chinese yuan held steady, likely supported by dollar sales from state-run banks in China after rating agency Moody’s cut China’s government credit rating outlook to negative.
The dollar has started the week on a positive note having risen 0.4% so far after three consecutive weeks of declines.
“We suspect markets may be positioning ahead of next week’s Fed meeting, when Chair Jerome Powell may insist on his pushback against rate cut bets,” ING Bank said in a note, referring to the dollar’s recovery.
The RBI and U.S. Federal Reserve are widely expected to hold rates steady at their upcoming meetings on Dec. 6-Dec. 8 and Dec. 12-Dec. 13, respectively.
But Fed futures indicate market participants currently expect the Fed to start easing policy rates as soon as March or May.
Bias on the rupee is towards depreciation but “steepness of the fall would be limited” on account of RBI’s interventions, Arnob Biswas, head of foreign exchange research at SMC Global Securities said.
Investors now await U.S. ISM Services and job openings data due later in the day.
