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MUMBAI – The Indian rupee closed slightly weaker on Thursday, pressured by weak Asian peers and strong dollar demand from local companies, but likely intervention from the Reserve Bank of India (RBI) limited losses.

The rupee ended at 83.40 against the U.S. dollar, marginally lower from its close at 83.3725 in the previous session, when it had dropped to a record low of 83.45.

The RBI sold dollars via state-run banks to prevent further losses on Thursday, four traders told Reuters.

The central bank was not aggressive in its intervention but seemed to be “holding the line” against a sharper fall, a foreign exchange trader at a state-run bank said.

The rupee fell 1.5% in the financial year ending March 31 and also logged its third consecutive quarterly fall.

Still, it outperformed major Asian peers, which declined 1.5% to 6% in the March quarter, pressured by a pullback in U.S. rate cut expectations, which boosted the greenback.

The dollar index rose over 0.2% on Thursday to 104.7, its highest level since mid-February and is up 3.2% over the quarter so far.

Most Asian currencies were lower with the Thai baht, down 0.3%, leading losses.

“In the near-term, the rupee seems likely to be under pressure,” Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services said.

Depreciation in the rupee is likely to be gradual given the RBI’s interventions to support the currency, Somaiya said.

Investors await the release of U.S. jobless claims data later in the day, followed by personal consumption expenditure (PCE) inflation figures on Friday.

The data, alongside remarks from Fed Chair Jerome Powell on Friday, are expected to influence expectations of when rate cuts might begin.

Indian financial markets will be closed for Good Friday. The local forex market will also be shut Monday at the start of the new fiscal.

  • Published On Mar 28, 2024 at 04:20 PM IST

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