The Indian rupee traded in a narrow range on Thursday with investors circumspect after it fell in the previous session tracking weak global equities before getting support from suspected central bank intervention.
Traders said the central bank was not seen in the currency market on Thursday, but they continued to be cautious after it was seen selling dollars on Wednesday when the rupee touched 44.37 to a dollar, its lowest level since January 15.
This came after months of suspected central bank intervention by the Reserve Bank of India to weaken the Indian unit. The partially convertible rupee ended at 44.26/27 per dollar, a touch stronger than Wednesday's 44.27/28. "That's why they called the rupee a managed currency - the day you would think it will fly off it doesn't, and the day you think it will crash it doesn't," said a dealer at a private bank.
The central bank is thought to intervene in currency markets to smooth excess volatility and protect exporters' competitiveness, but some analysts said it might also be to rein in money supply growth, currently running at 21.3 percent.