MUMBAI: The Indian rupee closed marginally weaker on Wednesday as dollar demand from local corporates and state-run banks alongside weakness in Asian currencies offset likely dollar inflows.

The rupee closed at 83.53 against the US dollar, slightly lower from its close of 83.5050 in the previous session.

A large New York-based bank was “consistently offering dollars” but buoyant local demand did not allow the rupee to gain, a foreign exchange trader at a foreign bank said.

There were strong dollar bids from state-run banks early in the session but demand in the latter half was pretty broad-based, the trader added.

Most Asian currencies declined, with the Japanese yen slumping to its lowest in 38 years while the Chinese yuan lingered near its weakest level since November last year.

Most analysts and traders expect the rupee to remain on the defensive as long as the yen and yuan stay under pressure. But the pressure is unlikely to translate to sharp weakness in the rupee.

Forecasters polled by Reuters expect the currency to trade within the narrowest range in nearly three decades over the coming year as the Reserve Bank of India (RBI) continues to maintain its tight grip.

There is a “higher likelihood” that the rupee could move towards the 83.60-83.70 levels before strengthening, Amit Pabari, managing director at FX advisory firm CR Forex said.

Meanwhile, benchmark Indian equity indices, the BSE Sensex and Nifty 50, rose to record highs and ended the session up by about 0.7% each.

Investors now await the release of US labour market data and the minutes of the Federal Reserve’s latest policy meeting, both due later in the day.