MUMBAI: The Indian rupee traded in a narrow range on Thursday, held in check by strong domestic dollar demand from oil importers, even as the greenback weakened.

The partially convertible rupee ended at 79.88 per US dollar versus its previous close of 79.8075. The currency has moved between a 79.68-79.9125 range all week.

“Higher oil prices are keeping the spot well bid despite some relief in the dollar index,” said trader at a private bank.

“We’re seeing some month end demand too from importers, while the market is reluctant to go short ahead of the Federal Reserve’s Jackson Hole meeting.” Oil prices continued to trade above $100 per barrel on concerns over supply tightness, adding to the pressure on rupee as India is a major crude importer.

The unit sat out a broader rally in Asian emerging markets that gained on the dollar wobbling, heading into the Fed’s economic symposium. Any commentary on the central bank’s rate hike path will be keenly watched.

Despite a volatile few days for global markets, the USD/INR pair’s realised volatility measured over the last 10 trading days has fallen to its lowest since July 28 as equity inflows and the Reserve Bank of India’s support insulated it from wild swings.

“We reckon that there is a fair chance of a relief rally after Fed Chair Jerome Powell’s statement, as he walks a fine line between inflation concerns and signalling that the Fed would be able to engineer a soft landing for the US economy,” HDFC economists wrote in a note.

Among EMs, India will be a beneficiary of likely dollar weakness to follow due to its strong domestic fundamentals, relative immunity from global trade slowdown and less dependency on tight monetary policy to attract foreign flows, they added.