The Indian rupee firmed against the dollar on Thursday as sentiment remained buoyant about investor inflows, but traders trod carefully fearing the central would aggressively start selling rupees to protect exporters.
The partially convertible rupee ended at 44.22/23 per dollar, moving up from Wednesday's close of 44.245/265. "It was a fairly quiet, rangey market today, and it moved with the stocks," said a dealer at a private bank.
"We're at a good (dollar) support level at the moment, and if it slips to 44.15 in the morning, the market expects the RBI will come in and buy," added the dealer.
Traders suspect the Reserve Bank of India of intervening in a bid to stem the strength of the rupee. Data on Monday showed the central bank bought about $2.8 billion in January, in addition to purchases of about $5 billion in November and December.