MUMBAI: The Indian rupee closed unchanged on Wednesday as likely U.S. dollar sales by the Reserve Bank of India (RBI) kept the local unit off its record low, offsetting pressure from higher crude oil prices and equity-related outflows.
The rupee ended steady at 83.2575 against the U.S. dollar after moving in a narrow 83.23 to 83.27 range.
While most Asian currencies rose tracking strength in the offshore Chinese yuan, the rupee saw another muted trading session.
Indian rupee ends slightly lower
The RBI likely sold U.S. dollars in the latter half of the trading session to keep the rupee off its record lows, three traders said. The rupee’s lifetime low of 83.29 was hit in October 2022.
Brent crude oil futures rose nearly 3% and were last quoted at $92.58 per barrel. The dollar index was largely steady at 106.205.
Equity-related outflows also pressured the rupee during the session, a foreign exchange trader at a private bank said. Overseas investors have sold $1.17 billion worth of Indian equities in October so far.
At this stage “no one is willing to take any speculative positions,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
Parmar expects the rupee to trend sideways till Monday as the market eyes the maturity of a $5 billion forex swap, undertaken by the RBI in April 2022, which could fuel a potential U.S. dollar shortage.
Large Indian banks have been accumulating dollars via USD/INR buy/sell swaps in which they will receive dollars on the spot date (in two working days) and have access to them for the tenure of the contract.
The rupee is likely to stay between the 82.90 and 83.70 range over the next month, with the RBI keeping a lid on further weakness, Sumitomo Mitsui Banking Corporation said in a note.
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