MUMBAI, Aug 28 (Reuters) – The Indian rupee traded lower on Wednesday, but a well recognised support level ensured that the currency fared better than many of its Asian peers.
The rupee was at 83.95 to the U.S. dollar at 10:40 a.m. IST, compared with 83.9250 in the previous session. The currency has been holding a near one paisa range, having opened marginally weaker at the open.
The rupee “yet again” does not seem at risk of falling past 84, “which should surprise absolutely no one”, a currency trader at a bank said.
“There is sufficient real (dollar) demand to keep the pair near 84 and then on the other side you have the RBI,” he said.
The RBI does not seem to be in favour of allowing the rupee to weaken past 84 right now, intervening regularly, according to traders.
The central bank’s intervention, alongside expected equity inflows provide a “glimmer of hope” for the rupee, Amit Pabari, managing director at fx advisory firm CR Forex said.
Equity inflows of upto $3 billion are expected following changes in the MSCI’s index which tracks emerging markets shares to come into effect from August 30.
A large part of the inflow related to this MSCI’s index weight changes happens on the day of when the changes come into effect, which would be this Friday.
ASIAN CURRENCIES FALL
Most Asian currencies were down on the day amid a lack of triggers. Investors are awaiting cues on what will be the pace of the Federal Reserve rate cutting cycle.
The July U.S. core PCE inflation data, the August U.S. jobs report and the August inflation data are all due before the Fed’s next meeting on September 17-18.
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