The rupee was steady against the dollar on Thursday as optimism over China reopening turned to caution after a rapid surge in cases, but was offset by a fall in crude prices.
Bloomberg showed the rupee was last changing hands at 82.8387 per dollar, compared to its previous close of 82.8663 on Wednesday.
PTI reported that the domestic currency rose 3 paise to 82.77 against the US dollar in early trade.
In the previous session, the rupee closed nearly flat, supported by the Reserve Bank of India after it fell to a one-month low of 82.9225 on Wednesday.
The currency moved in a narrow 10-paisa range in the previous session, with the 82.80-82.90 acting as a strong support zone as it has done over the past two weeks.
"USDINR to open flat at around 82.84 after Dow Jones fell by 365 points overnight and Nasdaq neared its yearly lows as rising China Covid cases brought back economic concerns. Asian currencies were down against the dollar," said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
"The USDINR pair to remain in the range of 82.50 to 83.00 with the RBI protecting the 82.90 level and dollar demand from oil companies weighing on the domestic currency. While quarter-end supplies could bring the pair down a bit, overall global recession concerns continue to hamper any significant recovery in the rupee," he added.
But investors have cautioned that it would be difficult to predict a direction because of the low volume of trading during the Christmas season.
Meanwhile, oil prices dropped to $82.8 per barrel as hopes for a recovery in demand were dashed by a spike in China's Covid cases.
Although a drop in crude prices could be modestly encouraging, the currency is still following the dollar and is likely to consolidate in the current range; a foreign exchange dealer told Reuters.
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