MUMBAI: The Indian rupee was trading higher on Wednesday tracking Asian peers, but dollar buying by oil companies capped its advance, traders said. The rupee was at 82.55 to the US dollar by 10:30 a.m. IST, up from 82.6050 in the previous session.

The “same story is playing out” of dips on the USD/INR running into “incessant” dollar buying, a senior trader at a private sector bank said.

Loan repayment by a large conglomerate and cash dollar demand related to oil and gold are among the reasons that are “floating around”, he said. Asian currencies were mostly higher amid the increasing likelihood that the US Federal Reserve will not raise rates next week.

The odds of a rate hike at the June 13-14 meeting have dropped to nearly 20% following weak US manufacturing and services data and relatively less hawkish comments by two Fed officials before the quiet period.

Meanwhile, the Reserve Bank of India will announce its decision on rates on Thursday.

Indian rupee headed higher on dollar pullback after weak US data

Analysts do not see a significant move on the rupee ahead of the RBI outcome. “Based on current market conditions, we do not foresee significant volatility in the USD/INR pair leading up to that event,” Anindya Banerjee, head research - fx and interest rates at Kotak Securities, said.

Speculators are adopting a wait-and-see approach, while options traders remain active, he added.