Mumbai: The Indian rupee was unchanged on Tuesday, 7 August, caught between overseas investors who sold the local unit on heightened risk aversion amid a global credit squeeze, and exporters who booked profits by unwinding dollar holdings.
The partially convertible rupee ended at 40.41/42 per dollar, steady from the last close, and still within sight of a nine-year peak of 40.20 hit last month.
“There was good two-way interest today, with buyers and sellers perfectly matched,” said a senior dealer with a private bank.
The rupee tracked the broad movements of Asian currencies, which were mostly steady as worries about credit markets kept investors on the sidelines, while fellow high-yielding units like the Philippine peso and Indonesian rupiah pulled back from early highs after a rally in US stocks.
Most Asian stock markets failed to sustain early gains, including the local benchmark index, which ended up 0.2%, but well off its early highs.
Local traders were also cautious ahead of the Federal Reserve’s policy-setting meeting later in the day.
Dealers were wary of building large positions in the local currency on concerns that the Reserve Bank of India (RBI) would start buying dollars aggressively in a bid to cap the rupee’s gains.
The RBI has played an active role to check the rupee, that has gained more than 9.5% against the dollar this year.
Dealers also said that an oil refiner was seen buying dollars, putting pressure on the rupee. Oil is India’s largest import.