By Jaspreet Kalra
MUMBAI(Reuters) -The Indian rupee was nearly flat on Wednesday, cushioned by likely intervention by the Reserve Bank of India which, traders said, helped outweigh the pressure from month-end dollar demand on account of importer payments.
The rupee fell to 88.3450 earlier in the session before recovering to 88.24 against the U.S. dollar, as of 11:30 a.m. IST. The unit was little changed on the day.
Broader dollar-selling interest followed in the wake of the central bank’s likely intervention, a trader at a Mumbai-based bank said.
This helped counter pressure from month-end dollar demand from importers and maturing positions in the non-deliverable forwards (NDF) market.
The dollar index was last up 0.25% at 98.9 ahead of a widely anticipated rate cut by the U.S. Federal Reserve later in the day.
Asian currencies were mixed, with the offshore Chinese yuan perched near a one-month peak on growing expectations of a potential U.S.-China trade deal.
“Following the softer-than-expected US CPI readings in September, the Fed is likely less worried about tariff-led inflation and more concerned about how the prolonged US government shutdown is adding to labour market weakness,” analysts at DBS said in a note.
Traders and analysts are also watching out for developments in U.S.-India trade negotiations. The absence of a deal has continued to weigh on the rupee, even as foreign portfolio inflows into local equities have recovered modestly in October.
A senior Indian government official said last week that a bilateral trade deal with Washington was “very near”.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50, rose on Wednesday, while the yield on the country’s 10-year benchmark bond was down slightly at 6.5239%.
(Reporting by Jaspreet Kalra; Editing by Eileen Soreng)
