By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee ended flat on Monday as pressure from month-end U.S. dollar demand from importers was blunted by the Reserve Bank of India’s continued defence of the local unit.
The rupee closed at 83.25, little changed from its close at 83.2450 in the previous session. The currency traded in a narrow 83.2450 to 83.27 range in the spot session.
Asian currencies were mostly higher and the dollar index dipped slightly.
The rupee “continues to outperform in instance of dollar strength and underperform in case of dollar weakness,” a foreign exchange salesperson at a private bank said.
The Indian currency has largely held its ground during dollar rallies, likely aided by the central bank’s market intervention, but has not gained much when the dollar falls, signalling persistent demand for the greenback.
The Reserve Bank likely sold dollars near 83.26-83.27 levels on Monday as the rupee remained close to its record low of 83.29, traders said.
Elevated U.S. Treasury yields and weak risk sentiment have prompted outflows from Indian equities, increasing pressure on the rupee.
Overseas investors have sold $2.44 billion of Indian shares in October so far.
But the rupee may be unable to hold its ground for much longer, analysts said.
“Rupee will be unable to hold such dragging factors until the foreign capital inflows improves substantially, which looks a bit of a tight call,” said Arnob Biswas, head of foreign exchange research at SMC Global Securities.
This week investors are focussed on central bank policy decisions due in the United States, Japan and England.
The Bank of Japan will decide whether to raise its yield cap on Tuesday while the U.S. Federal Reserve is expected to keep rates steady on Wednesday.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)