The rupee ended flat at Rs 83.95 after erasing morning gains during the last hours of trade on Wednesday. It had hit a fresh low of Rs 83.98 against the US dollar during the session.
The local currency had opened at Rs 83.89 against the US dollar amid expectations of likely dollar selling by the Reserve Bank of India to support the rupee, after its steep fall in the previous session. A flat oil price, too, initially supported the rupee demand.
The currency closed at Rs 83.96 on Tuesday after it weakened nearly 12 paise in the previous session, as foreign institutions were offloading Indian stocks.
Brent Crude was at $77.32, and the US Dollar Index was at 103.28.
Brent crude had risen 0.03% to $76.50 at 9:10 a.m., while the dollar index had risen by 0.28% to 103.26.
"The BOJ Deputy Governor assured the markets that there would be no rate hike amidst continuing market volatility. Fears of US recession risks and unwinding of carry trades funded by a cheap yen sparked market stress and a hawkish turn by BOJ last week raised alarms about how fast it could tighten monetary policy," Anil Kumar Bhansali, head of Treasury and executive director, Finrex Treasury Advisors LLP, said.
Premiums fell to 2.02% as dollar shortage was reported by market participants as all dollar was getting absorbed by RBI, analysts said
"The rupee is expected to be in the range of 83.85/84.05 tomorrow as we await for MPC meeting results at 10 a.m., wherein RBI is expected to keep rates on hold," he said.
Asian stocks rose after indications from the Bank of Japan's Deputy Governor, Uchida, affirmed that if markets are unstable, then the BOJ will not raise rates.
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