Rupee ends flattish even as dollar hovers near 3-month low

The Indian rupee closed little changed on Wednesday, as U.S. dollar demand from oil companies and other importers eroded the impact of the dollar index hovering near a three-month low.

The rupee ended at 83.3250 against the dollar, little changed from its close at 83.3325 in the previous session.

The dollar index fell to its lowest since August in Asia trading hours and was last quoted at 102.83.


U.S. Treasury yields also edged down in Asia, with the 10-year dipping to 4.25%, the lowest since September.

The rupee has largely been on the sidelines even as the greenback has retreated on hopes of Federal Reserve rate cuts next year.

"When the dollar index was at 107, we were near 83.30. Now the dollar index is at 102, we're still near 83.30," a foreign exchange trader at a private bank said.

Month-end dollar demand from importers, including local oil companies, capped gains for the rupee on Wednesday, the trader added.

Comments from U.S. Federal Reserve officials have signalled growing comfort about the prevailing level of policy rates.

If inflation keeps falling "for several more months... we could start lowering the policy rate just because inflation is lower," Fed Governor Christopher Waller said on Tuesday.

Fed futures are now pricing in slightly more than 100 basis points of rate cuts in 2024, beginning most likely from May.

The rupee is unlikely to appreciate much in the near-term, Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services, said.

But it will be key to see what actually spikes volatility in the rupee, given its general unresponsiveness, Somaiya added.

The rupee's actual and expected volatility continues to hold near multi-year lows.

Investors now await the release of India's GDP figures and U.S. inflation data on Thursday. (Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)