Rupee closes flat, wedged between inflows and local oil companies’ dollar demand

By Jaspreet KalraMUMBAI (Reuters) – The Indian rupee ended flat on Tuesday after drifting in a tight band throughout the session as dollar demand from domestic oil companies eroded room for gains on the back of sustained inflows.

The rupee closed at 82.8975 against the U.S. dollar, barely changed from its close of 82.89 in the previous session. It moved between 82.88 and 82.9025 during the session.

The dollar index edged lower to 103.7, while Asian currencies were mostly range-bound heading into the release of key U.S. economic data, which will offer cues on the timing of U.S. Federal Reserve interest rate cuts.

U.S. durable goods order and consumer confidence index data are due later in the day.

Investors are currently pricing in a 17% chance of a cut at the Fed’s policy meeting in May, down from about 34.5% a week ago, according to the CME’s Fed tool.

While two large foreign banks were spotted offering dollars in Tuesday’s session, consistent bids from domestic oil companies contributed to keeping the rupee in a narrow range, a foreign exchange trader at a private bank said.

Meanwhile, dollar rupee forward premiums fell, with the one-year implied yield falling 4 basis points (bps) to 1.68%, its lowest level in more than two months.

Broad-based receiving interest from banks pushed forward premiums lower, with the upcoming maturity of the Reserve Bank of India’s $5 billion USD/INR sell-buy swap spurring receiving in near forwards as well, traders said.