The rupee closed at 82.8950, unchanged from its closing level in the previous session. The rupee hovered in a tight band between 82.89 and 82.9275 through the session.
Price action on the currency was “pretty dull” through the day, a foreign exchange trader at a private bank said. Such movement is likely to persist until 82.80 and 83 hold on either end, the trader said.
The dollar index ticked up to 103.87 while most Asian currencies weakened, with the Malaysian ringgit down 0.3%, leading losses.
Near-term dollar-rupee forward premiums declined, pressured by the fall in the overnight swap rate, which declined on concerns of a dollar crunch.
The Reserve Bank of India’s (RBI) persistent forex intervention has negatively impacted dollar liquidity, traders said. Near-tenor forward premiums have also been under pressure on account of RBI’s upcoming swap maturity. The central bank is likely to take delivery of the $5 billion sell/buy swap, Reuters reported on Monday. The rupee is expected to be “on the defensive” in the near-term as markets await the release of U.S. jobs data and Federal Reserve Chair Jerome Powell’s remarks later in the week, Arnob Biswas, head of foreign exchange research at SMC Global Securities, said.
Meanwhile, Bloomberg Index Services said on Tuesday it will include 34 Indian government bonds that are open for investment under the country’s fully accessible route in its emerging market local currency indexes from January 2025.
The announcement follows JP Morgan’s decision to add Indian government bonds in its Government Bond Index-Emerging Markets from June 2024. Analysts expect a boost to debt inflows from these additions.
