MUMBAI: The Indian rupee closed little changed on Thursday, wedged between persistent dollar demand from importers and positive cues from gains in Asian peers as appetite for riskier assets recovered.
The rupee closed at 88.6125 against the U.S. dollar, nearly flat from its close of 88.6550 in the previous session.
Asian currencies were mostly higher between 0.1% to 0.3%.
Despite the positive regional cues, the rupee shuffled in a narrow band as expectations of gradual depreciation continued to spur dollar demand from importers while state-run banks were spotted offering dollars intermittently, traders said.
The rupee appears to be “settling into a 88.50-88.80 band in the near-term,” a trader at a private bank said.
Positive news on U.S.-India trade negotiations could lift the currency out of the range while a fall below 88.80 is only likely if the central bank eases its defence of that level, the trader added.
Frequent interventions by the RBI around the 88.80 mark have helped support the rupee since it first hit that level in late-September.
Elsewhere, Indian equities also diverged from gains in regional peers. MSCI’s gauge of shares in Asia excluding Japan rose nearly 1% but India’s benchmark equity index, Nifty 50 ended down 0.3%. The dollar index was down 0.2% at 99.9.
“While we note signs that the dollar rally is running out of steam, it’s equally true that markets are lacking a compelling story to rebuild dollar shorts. The lack of data and a cautious Fed communication means there aren’t many in sight,” analysts at ING said in a note.
A congressional impasse has resulted in what is now the longest-ever U.S. government shutdown, delaying the release of key economic data. Remarks from Federal Reserve policymakers will be in focus later in the day.
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