MUMBAI: The Indian rupee trimmed early gains on Wednesday even as Asian peers rose ahead of the Federal Reserve’s policy decision due later in the day.

The rupee was at 83.7225 against the US dollar as of 10:20 a.m. IST, nearly unchanged against its close at 83.7275 in the previous session.

The currency hit a record low of 83.74 on Monday.

The dollar index was largely steady after dipping on Tuesday while most Asian currencies rose.

The Thai baht and the Korean won rose about 0.4% each.

The Japanese yen was slightly higher at 152.7 after the Bank of Japan raised its short-term interest rate target and said it will gradually reduce the amount of bonds it is buying under its quantitative easing programme.

The Federal Reserve is widely expected to keep rates unchanged on Wednesday.

Investors will focus on the commentary from Chair Jerome Powell for cues on the extent of policy easing this year.

“Our base case is for a dovish hold in rates, with the Fed likely to signal the path towards interest rate cuts later this year,” MUFG Bank said in a note.

Indian rupee ends moderately higher

Interest rate futures are currently pricing in about 68 basis points of Fed rate cuts over 2024.

While the rupee may rise slightly above 83.70 due to the dovish expectations surrounding the Fed meeting, the gains are unlikely to last as the broad bias continues to be for a gradual depreciation, a foreign exchange trader at a private bank said.

Meanwhile, dollar-rupee forward premiums ticked up, with the 1-year implied up 2 basis points at 1.85%, aided by the fall in US bond yields.