MUMBAI, Oct 16 (Reuters) – The Indian rupee closed slightly stronger on Wednesday, supported by broad-based interbank dollar sales towards the end of the session after having spent the day locked in a narrow range just shy of its all-time low.
The rupee closed at 83.9950 against the U.S. dollar, up from its close at 84.0375 in the previous session.
The currency spent most of the session near the 84.04-84.05 levels, just shy of its all-time low of 84.0750 hit on Monday.
Dollar demand from foreign banks, likely on behalf of custodial clients, blunted the positive effects of lower oil prices and gain in most of the rupee’s Asian peers, traders said.
But dollar sales picked up towards the end of the session and banks’ hesitation to initiate longs on the dollar-rupee near these levels helped make room for a move lower, a trader at a state-run bank said.
Pressured by the outflows and elevated oil prices, the rupee weakened past 84 for the first time ever last week. But it has avoided sharper losses, supported by routine interventions by the Reserve Bank of India.
Asian currencies were up between 0.1% and 0.5% on the day, while the dollar index was a tad lower at 103.2.
“We continue to see a non-negligible risk that markets will place some “Trump hedges” by buying dollars ahead of a closely-contested U.S. election,” ING Bank said in a note.
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Reporting by Jaspreet Kalra; Editing by Savio D’Souza
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