The Indian rupee gained on Wednesday, in line with most of its Asian peers, on the back of dollar sales from two large foreign banks. The rupee ended at 82.9675 against the U.S. dollar, up 0.11% compared with its close at 83.0550 in the previous session.
The dollar index hovered little changed near the 104 level, after retreating nearly 0.3% on Tuesday following a rally that lifted the index to its highest level in nearly 3 months.
Most Asian currencies strengthened, with the Indonesian rupiah, up by 0.6%, leading gains. Asian equities also rose on Wednesday, as China’s measures to support its ailing stock market boosted sentiment.
Dollar sales from two large foreign banks aided the rupee, a foreign exchange trader at a state-run bank said. Analysts expect the Indian currency to remain in a tight range and rise slightly to 82.84 in three months, and 82.40 in a year, as the Reserve Bank of India continues to intervene in the currency market, according to a Reuters poll conducted between Feb. 1-6.
Price action on Wednesday suggested that inflows helped the rupee rise above 83 to the dollar, Arnob Biswas, head of foreign exchange research at SMC Global Securities, said.
While the greenback was on the defensive on Wednesday, strong U.S. economic data and paring of aggressive bets on rate cuts by the Federal Reserve have helped the dollar index clock a year-to-date gain of about 2.7%.
In India, focus will be on the Reserve Bank of India’s monetary policy decision due on Thursday. The RBI’s rate-setting panel is widely expected to hold rates steady for a sixth straight meeting.