By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee ended nearly unchanged on Tuesday after shuffling in a familiar range as traders held off fresh wagers against the currency on expectations of inflows and frequent interventions by the Reserve Bank of India.
The rupee closed at 88.7725 against the U.S. dollar, nearly unchanged from its close at 88.78 in the previous session.
The currency had slipped to a record low of 88.80 last week. Worries over the economic hit from steep U.S. tariffs have kept traders and investors cautious on the currency’s outlook but inflows tied to IPOs this week may offer some relief.
In the near term, the RBI seems to have set a floor for the rupee around 88.80 and until that gives way, one should expect rangebound price action to continue, a trader at a state-run bank said.
The RBI likely conducted dollar-rupee buy/sell swaps on Tuesday, prompting a decline in forward premiums. The 1-year dollar-rupee implied yield was down 6 basis points to 2.23%.
The dollar index, meanwhile, was up 0.3% at 98.4, boosted by weakness in the euro and the Japanese yen as investors kept their focus on regional political developments.
The euro remained on a weak footing following the resignation of France’s prime minister on Monday, while the yen was bogged down by concerns over fiscal policies following Sanae Takaichi’s leadership victory in Japan.
“The dollar is an expensive short position given its 4.15% per annum one-week interest rate. If no significant U.S. data is forthcoming, there is even less reason to sit with – let alone add to – short dollar positions,” analysts at ING said in a note.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50, were up slightly on the day while the yield on India’s 10-year benchmark bond was down slightly at 6.5105%.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
