MUMBAI: The Indian rupee held in a tight range on Monday with intermittent dollar buying intervention by the Reserve Bank of India (RBI) limiting any upside in the domestic currency against a broadly weaker greenback.

The rupee closed at 81.7950 per U.S. dollar compared with 81.80 in the previous session.

“The RBI is still there in the market… otherwise there is no bidder (for dollars) in the market,” a trader with a state-run bank said, adding that exporters were also hedging their dollar receivables at these levels.

The central bank has been absorbing a large part of the dollar inflows seen in the market over the past week, traders and analysts said.

“The RBI continued buying… thus protecting the dollar and exporters from a fall in value,” said Anil Kumar Bhansali head of treasury at Finrex Treasury Advisors LLP.

Indian rupee poised to open higher after Fed hints at a pause

The RBI’s forex reserves surged to a 10-month high of $588.8 billion in the week ending April 28, latest data showed. Though the data also accounts for valuation changes, analysts said a large part of it could also be due to dollar buying intervention.

Foreign institutional investors bought shares worth 116.31 bln rupees ($1.42 bln) in April on a net basis; $1.7 bln over the last six sessions alone.

The dollar began the week under pressure on Monday, with traders betting it might have peaked along with U.S. interest rates while keeping a wary eye on looming inflation and loans data.

The focus now shifts to U.S. inflation data due Wednesday, with economists expecting a 0.4% month-on-month increase in the core inflation rate.

The data will draw scrutiny in the wake of increasing confidence that the Federal Reserve will opt to pause its rate.

Traders will also watch out for India’s inflation data, due later in the week, which will provide cues on the RBI’s next rate hike moves.