By Siddhi Nayak
MUMBAI (Reuters) – The Indian rupee ended little changed on Monday as traders remained wary of adding large positions in a holiday-truncated week on expectations the central bank would step in to curb any volatility in the local currency.
The rupee ended at 83.3325 against the dollar, compared with 83.34 in the previous session. The local unit traded in a narrow four-paisa range throughout Monday’s session.
The rupee, on Friday, hit a lifetime low of 83.42, affected by a technical system outage. The Reserve Bank of India (RBI) had stepped in to stem the fall, according to traders.
While state-run banks were supplying dollars in the spot market even on Monday, traders said it was difficult to ascertain whether it was for their clients or for the RBI.
“Since October, rupee remained in the range with record low volatility – the main target of the central bank,” said Dilip Parmar, a foreign exchange analyst at HDFC Securities.
As long as volatility remains low and there is window for banks to take fresh positions, the rupee could trade in the range of 83.00-83.60, Parmar added.
Investors are now eyeing the U.S. inflation reading due on Tuesday for further cues. India’s financial markets are closed on Tuesday for a local holiday.
U.S. headline prices likely rose just 0.1% month-on-month in October, thanks to lower energy prices, while the more important core measure likely increased 0.3% on-month and 4.1% on-year, according to a Reuters poll.
Federal Reserve officials, including Chair Jerome Powell, said last week that they are still not sure that interest rates are high enough to end the battle with inflation.
The Fed’s next policy decision is due in December with a 11% probability of a rate hike.
Ahead of the U.S. inflation data, India will release headline inflation reading late on Monday. October’s print is expected to come at a four-month low of 4.80%, according to a Reuters poll.
(Reporting by Siddhi Nayak; Editing by Dhanya Ann Thoppil)
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