Precise Investors Editorial Team
The currency was at 92.43, down marginally from its close at 92.37 in the previous session
The Indian rupee was hovering in a tight range on Wednesday, restricted by elevated demand for dollars at the daily reference rate and U.S. dollar sales by state-run banks, most likely for the central bank.
The currency was at 92.43 as of 10:00 a.m. IST, down marginally from its close at 92.37 in the previous session. The rupee has been trading close to its all-time low of 92.4750 hit last week.
While Brent crude prices eased, offering some relief to currencies, the rupee was under pressure due to higher demand to buy dollars at the reference rate.
The Reserve Bank of India’s reference rate is the daily benchmark used to settle contracts and often attracts concentrated dollar buying or selling.
Two traders said state-run banks were offering dollars, keeping the rupee in a tight band, echoing price action from earlier this week.
Given that risk sentiment is broadly stable, the RBI may look for an opportunity to beat down USD/INR. In that case, a move to 91.80-91.90 is likely, which can be used as an opportunity to buy, said Abhishek Goenka, chief executive at FX advisory firm IFA Global.
Indian equity benchmarks advanced 0.5%, tracking peers and the benchmark bond rose, comforted by the decline in oil prices.
Later in the day, the focus will also be on the U.S. central bank’s policy decision. While no change on rates is expected, investors will play attention to commentary on how the ongoing Iran war may alter growth-inflation dynamics in that country’s economy.
In this meeting, the central bank will probably lean towards the dictum of doing no harm rather than making huge changes, MUFG said in a note.
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