The Indian rupee was little changed on Thursday, despite Asian peers moving higher, as U.S. dollar demand from importers and local oil companies offset a softness in the greenback.
The rupee was at 83.2350 against the U.S. dollar as of 11:30 a.m. IST after closing at 83.24 in the previous session.
The dollar index fell to 106.62, down about 0.12%. Asian currencies rose, with the Korean won leading gains.
U.S. Treasury yields eased after a relentless climb to multi-year highs earlier in the week. The yield on the 10-year Treasury was last quoted at 4.71%, down from 4.88%, the highest level since August 2007 hit on Wednesday.
Persistent selling from foreign investors could also mount pressure on the local unit, a foreign exchange trader at a state-run bank said.
Foreign investors snapped a six-month buying streak in September, selling over $1.77 billion worth of equities.
The rupee is likely to see “one more day of sideways trading,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities. In some ways, the rupee is caught in a “tug of war between foreign investors and the RBI,” Parmar added.
The RBI has routinely intervened to support the rupee and prevent a move towards record low. The currency hit a lifetime low of 83.29 in October 2022.
The rupee is likely to gain only modestly and continue to hold around 83.00/U.S. dollar levels over one to three months as RBI intervention is seen holding the unit in a tight range, according to a Reuters poll.
Focus now turns to the RBI’s monetary policy decision due on Friday. The central bank is widely expected to keep rates unchanged.
