By Jaspreet Kalra
MUMBAI – The Indian rupee was largely unchanged on Friday as dollar sales from state-run banks, likely on behalf of the Reserve Bank of India (RBI), curbed weakness in the currency even as its Asian peers slipped.
The rupee was at 83.48 against the U.S. dollar as of 10:40 a.m. IST, barely changed from its close at 83.50 in the previous session.
The RBI likely sold U.S. dollars near 83.50 levels to cap depreciation of the rupee, four traders told Reuters.
Interventions from the central bank have helped limit the weakness in the rupee over the last few trading sessions despite pressure from elevated outflows from Indian equities and dollar demand from local importers, including oil companies, traders said.
Foreign investors have sold $3.3 billion worth of Indian equities in May so far, the highest monthly outflow since January last year, amid nervousness about the upcoming outcome of the country’s national elections.
“While a large dollar inflow may cause some temporary appreciation in the rupee, it’s likely to stay in the 83.40-83.55 band till the election outcome,” a foreign exchange trader at a state-run bank said. India’s election results are due on June 4.
The dollar index rose 0.1% to 104.6, while Asian currencies weakened with the Korean won down 0.8% and leading losses.
Major Asian currencies had rallied on Thursday as softer-than-expected U.S. inflation data boosted hopes of rate cuts by the Federal Reserve but the rupee largely remained on the sidelines.
The dollar-rupee pair is expected to be rangebound in the near term as dips continue to see strong buying interest, Apurva Swarup, vice president at Shinhan Bank India, said.
(Reporting by Jaspreet Kalra; Editing by Sohini Goswami)
