MUMBAI: The Indian rupee remained in a narrow band on Thursday and closed little changed, tracking subdued moves in most of its Asian peers.
The rupee ended at 83.0425 against the US dollar, nearly unchanged compared with its previous close at 83.03.
The local unit hovered in a tight range between 82.9950 and 83.0350 during the day’s session.
The dollar index was slightly lower at 104.6, while most Asian currencies were rangebound, save for the Philippine peso which rose by nearly 0.3%.
At these levels, it is “hard to put a directional bias” to the rupee but an extension in the dollar’s recent gains could spur marginal losses in the local unit, a foreign exchange trader at a private bank said.
Dollar sales from state-run banks in the later half of the session helped limit the local currency’s fall, the trader added.
The paring of aggressive US rate cut expectations on the back of stronger-than-expected economic data has aided the dollar and helped lift US bond yields, but the rupee has managed to hold its ground even as its Asian peers have slipped.
While the dollar index is up more than 3% in the year so far and the 10-year US Treasury yield has risen 37 basis points, the rupee has strengthened slightly year-to-date.
In the near term, the rupee’s rangebound behaviour is likely to continue with 82.90 and 83.15 serving as the immediate resistance and support respectively, said Arnob Biswas, head of foreign exchange research at SMC Global Securities.
Meanwhile, India’s merchandise trade deficit in January declined to $17.49 billion, down from $19.8 billion in December, data released on Thursday showed. Investors now await the release of US retail sales and initial jobless claims data due later in the day.
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