MUMBAI: The Indian rupee ended slightly lower on Tuesday, tracking a dip in its Asian peers but managing to hold above a key support level due to dollar sales by state-run banks.

The rupee closed at 83.9750 against the U.S. dollar, marginally weaker than its close of 83.9550 in the previous session.

The currency would have endured a steeper fall if not for dollar offers from state-run banks, traders said. The rupee had declined to its all-time low of 83.9850 last week.

The dollar offers from state-run banks were “most likely,” on behalf of the Reserve Bank of India (RBI) but they were relatively mild so it’s hard to be sure, a senior trader at a foreign bank said.

Over the past month, the RBI has routinely intervened to support the currency near these levels, containing the rupee in a narrow range of around 84 per dollar.

Indian rupee may dip on risk aversion; Fed uncertainty persists

However, a popular option trading strategy suggests the rupee may not depreciate sharply even if it drops past the closely watched psychological support level of 84.

On the day, Asian currencies were slightly weaker, with the Korean won down 0.2% and leading losses. The dollar index held steady at 101.7.

FX markets were in a “consolidative mode,” ahead of the U.S. presidential debate later in the day, ING Bank said in a note.

“Should a clear winner emerge from the debate, expect the FX market to start ‘front-loading’ positions it would have taken after the election result in November,” the note said.

Meanwhile, dollar-rupee forward premiums rose with the 1-year implied yield ticking up to 2.21%, its highest level since May 2023.