Indian rupee closes flat as RBI seen arresting currency slide
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The Indian rupee remained little changed on Tuesday, with some traders pointing to support from the Reserve Bank of India, ahead of a key U.S. central bank event.
The partially convertible rupee ended the session at 79.8625, compared to its previous close of 79.8675, in spite of RBI commentary about inflation peaking and likely moderating.
The dollar index crossed 109-levels, with further sharp gains expected amid hopes of the U.S. Federal Reserve delivering a more hawkish commentary at its Jackson Hole Symposium starting Thursday. [FRX/]
"RBI is the only (dollar) seller in the market," said Anil Bhansali, head of treasury at Finrex Treasury Advisors, explaining that there have been no dollar inflows while demand remained strong, particularly from oil importers.
"RBI may relent next week if the Fed chief is quite hawkish in his comments, and allows rupee to depreciate. They may keep protecting every level, but I don't think they'll be able to change the direction," he added.
The rupee has traded in tight bands for both days this week, hovering very close to its record low of 80.065 hit last month. Traders agree that a breach of that level is very likely.
Most of rupee's peers also declined as risk sentiment was capped across Asian emerging markets, with Europe's growing energy crisis feeding into recession fears. [EMRG/FRX]
Indian stocks ended an extremely volatile session up 0.5%.
