The rupee closed at 89.65 against the dollar, unchanged from its closing level in the previous session.
Traders pointed to dollar bids from local oil companies, among other importers, alongside lingering downward pressure on the currency from the NDF market, which at least partially reflects speculative pressure on the unit.
The rupee has eased off its record lows and onshore traders “remain hesitant to build longs (on USD/INR),” a trader at a state-run bank said, referring to hesitance that has crept in on wagering against the rupee following the central bank’s heavy-handed interventions last week.
“USD/INR is expected to trade in the 89.20-90.20 range. A sustained break below 89.20 could open the door towards 88.50, while on the upside, a break above 90.10 may trigger a move higher,” said Amit Pabari, managing director at FX advisory firm CR Forex.
While the interventions managed to pull the rupee up by about 2% from its all-time low, they failed to faze dollar-rupee forward premiums, which have relentlessly climbed to multi-year peaks across near and far tenors.
Outsized moves in the forward market intensified last week as the dollar glut collided with regulatory and balance-sheet constraints, leading to a spike in premiums. Bankers have urged the central bank to intervene to limit the pressure.On Tuesday, the 1-month dollar-rupee forward premium soared to nearly 48 paisa, the highest since 2019, while the 1-year implied yield touched a peak of 3.29% before retreating.
Receiving interest from state-run banks helped cool off far forward premiums, two traders said.
Elsewhere, the dollar index was down 0.2% at 97.9, the lowest in over two months, while Asian currencies were mostly higher between 0.1% and 0.4%.
