The Indian rupee closed little changed against the US dollar on Tuesday, mirroring the relatively steady greenback. The local currency ended trading at Rs 84.079 per dollar, compared to the previous close of Rs 84.076, as per Bloomberg data.
The rupee traded in a very narrow range through the day, with likely Reserve Bank of India interventions providing crucial support on the downside.
Data released on Friday shows a dip in India's forex reserves for the third consecutive week, reflecting the central bank's recent support for the domestic currency. During times of volatility, the central bank deploys its dollar reserve to stabilise the local currency.
"With critical US economic data releases slated for this week, the rupee's immediate trajectory hangs in the balance. Investors are watching for key factors that could sway the dollar’s strength, impacting the rupee’s positioning," said Amit Pabari, analyst at CR Forex Advisors.
The dollar index, which measures the strength of the greenback against a basket of six currencies, edged 0.04% lower at 104.15. The US 10-year bond yield was 2 bps higher at 4.3%.
"Asian currencies be at risk if US elections result in a Republican sweep, though at present it is a 50-50 chance on who will win the presidency," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
Brent crude oil prices recovered from a recent decline to hover around $72 per barrel, the lowest level since the start of October.
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