The rupee had opened higher at 87.8325 per US dollar, supported by a media report that Washington may cut tariffs on Indian imports from 50% to 15-16%.
However, the advance was quickly reversed, with the coin falling to 87.96 intraday before recovering to end higher at 87.84. On Monday it stood at 87.9275.
Indian currency and money markets were closed on Tuesday and Wednesday due to Diwali holidays.
“Now we all know that 88 is the most important level to protect, and when the central bank thinks this level is close to being exceeded, they will make their presence felt,” said a trader at a state-owned bank.
The Reserve Bank of India has been selling dollars through state-owned banks whenever the rupee has weakened to 88, a move traders say is likely aimed at magnifying the impact of its heavy intervention last Wednesday. “We do not rule out further interventions in dollar sales in the coming days, but unless the currency experiences another sharp move towards 89-90 against the USD, we expect such intervention to be more limited in the future,” Mitul said. Kotecha, head of FX & EM macro strategy Asia at Barclays Bank, said in a note.
Meanwhile, Reuters reported that US President Donald Trump is considering curbing software-based exports to China – ranging from laptops to jet engines – in response to Beijing’s restrictions on rare earth shipments, which are undermining demand for Asian currencies.
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