The Indian rupee turned flat at 83.33 against the US dollar (22.70 against UAE dirham) in early trade on Thursday amid a strong American currency and higher crude oil prices.
Forex traders said the positive equity markets and inflow of foreign funds resisted the fall in the Indian currency.
At the interbank foreign exchange, the South Asian currency opened at 83.32 (22.70 against dirham) and lost further to trade at the previous closing level of 83.33 against the greenback.
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The currency fell to a historical low of 83.45 (22.74 to the UAE dirham) last week on aggressive dollar demand from local and foreign banks towards the end of the session, traders said. However, likely intervention from the Reserve Bank of India (RBI) helped the currency pare some of its losses, they said.
The RBI intervened across the spot, futures and the offshore non-deliverable forwards markets to support the rupee, three traders said.
It’ll be important to watch if the central bank nudges the South Asian currency higher on Thursday, as a slight downward bias is likely to persist in the market till the rupee holds below 83.30, a foreign exchange trader at a private bank said.
Overnight, global index provider FTSE Russell did not add Indian bonds to its index, and said the nation will remain on the FTSE Fixed Income Country Classification Watch List for potential reclassification.
The dollar index was little changed at 104.32 while most Asian currencies fell, with the Malaysian ringgit, down nearly 0.3%, leading losses.
Apart from the offshore Chinese yuan’s recovery from its recent lows, “there hasn’t been much catalyst of late to spur sustained strengthening of Asian currencies”, MUFG Bank said in a note.
Federal Reserve Governor Christopher Waller said on Wednesday that while he still expects the Fed to cut rates this year, “data suggests fewer rate cuts (are) possible”.