Rupee quiet post opening dip, RBI likely defending 82.80/USD

The Indian rupee was held in a narrow range post the opening decline on Tuesday, thanks to the Reserve Bank of India’s (RBI) likely dollar sales, traders said.

The local currency was at 82.8050 against the U.S. dollar by 10:50 a.m., down from 82.7450 on Monday, settling into a 3-paisa range post the fall.

“It is possible that the RBI is offering dollars and making sure that the current level holds. That is what market participants expect and the RBI is delivering on it,” a senior forex trader at a private sector bank said.

At the same time, it “is just too difficult” to be sure whether the central bank is intervening when “you have this narrow a range,” he added.

Another spot trader pointed out that the market itself may be “just playing off” the fact that the RBI will not allow the rupee to depreciate below the 82.80-83 range.

“If it crosses 83, people start thinking about 85, 86 levels,” said Ritesh Bhansali, vice president at Mecklai Financial Services.

A trader at a private sector bank reckoned the current levels could be the rupee’s “final gasp” above the 83 level. He, however, did not expect the currency to weaken to 83 on Tuesday.

The rupee’s fall at open came alongside a fall in its Asian peers, down between 0.2% and 0.7%.

The U.S. dollar strengthened on Tuesday following hawkish comments from a Federal Reserve official that more interest rate hikes would likely be needed to lower inflation to the Fed’s 2% target.

Investors now await U.S. consumer inflation data, due on Thursday.

(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)

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