The Indian rupee remained largely unchanged on Thursday, supported by likely intervention from the Reserve Bank of India (RBI) amid pressure from dollar demand by importers and foreign banks.
At 11:20 a.m. IST, the rupee stood at 84.4625 against the US dollar, slightly weaker than the previous day's close of 84.4525.
Traders observed state-run banks selling dollars in early trading, likely acting on behalf of the RBI. The central bank has consistently intervened in recent sessions to defend the rupee near the critical support level of 84.50. The rupee had previously weakened to a record low of 84.5075 last week. Dollar demand from foreign banks and importers continued to weigh on the currency, a trader at a private bank noted.
Meanwhile, other Asian currencies showed mixed movements, and the dollar index trimmed some of its losses after dropping 0.7% on Wednesday.
"Profit-taking pushed the US dollar and bond yields lower," said DBS Bank in a note. "We remain cautious of further volatility, especially with unpredictable statements from the US President-elect regarding potential tariffs on China, Canada, and Mexico."
In the currency markets, dollar-rupee far forward premiums rose, benefiting from lower US bond yields. The 1-year implied yield increased to 2.23%, its highest in three weeks.
Far forward premiums have found a range, with the 1-year yield likely to remain between 2.10% and 2.40% unless there is a significant shift in expectations for rate cuts, a trader at a state-run bank explained.
The RBI is widely anticipated to leave rates unchanged at its upcoming policy meeting next week, while markets are pricing in nearly a 70% probability of a US rate cut in December.
