The Indian rupee ended little changed on Tuesday despite rising to its highest in nearly three weeks in the session as dollar demand from state-run banks, likely on behalf of importer clients, eroded the local unit’s gains, traders said.
The rupee ended at 82.97 against the U.S. dollar, barely changed from its close of 82.9625 in the previous session.
The local currency rose to an intraday high of 82.8750 and then pared its gains close to the end of the session.
The dollar index rose slightly to 104.14 while most Asian currencies gained, led higher by the Thai baht and Korean won; both were up about 0.3%. The offshore Chinese yuan, too, rose to its highest in nearly three weeks before paring gains.
Dip-buying interest on the dollar-rupee pair from both importers and speculators ate into the local unit’s gains on Wednesday, a foreign exchange trader at a foreign-run bank said.
In the near term, the rupee is unlikely to move much outside its prevailing range between 82.80 and 83.20, Arnob Biswas, head of foreign exchange research at SMC Global Securities said.
Investors await the minutes of the Federal Reserve’s January meeting, due to be released during U.S. trading hours.
Market participants have pulled back bets of aggressive rate cuts by the Fed over 2024 following the central bank’s meeting in January and sustained strength in U.S. economic data.
Investors are currently pricing in a 37% chance of a rate cut in May, down from about 84% a month earlier, according to CME’s FedWatch tool.
Remarks from Fed officials scheduled to speak later in the day will also be key as they are likely to offer cues about policymakers’ thinking on the future rate trajectory. (Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
