By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee fell to a two-week low on Tuesday and while the central bank likely stepped in to avert deeper losses, traders expect a string of maturing positions in the non-deliverable forwards market to keep up pressure on the currency.
The rupee declined to 88.40 in early trading – the lowest since October 14 – before recovering slightly to last quote at 88.2675, little changed on the day.
Traders noted dollar sales by state-run banks, most likely on behalf of the Reserve Bank of India, which helped limit the currency’s fall.
While the rupee staged a modest recovery earlier in the month on the back of strong central bank intervention, persistent importer hedging and the cutting of long wagers after it fell past 88 has weighed on it since.
Dollar bids spurred by the maturity of positions in the NDF market add another headwind the rupee may have to contend with now, a trader at a large private bank said.
Given how active the central bank was in the market segment late last month, there is a maturity likely to be lined up nearly every day of this week, according to the trader.
“USD/INR has been caught in a narrow range around 88.00, facing stiff resistance on the upside from intervention risks, while the global dollar moves limit a relief rally in the rupee,” analysts at DBS said in a note.
Elsewhere, the dollar index was a touch lower at 98.6 but on course to end the month up nearly 1%.
Asian currencies, meanwhile, traded mixed with the Philippine peso hitting its lowest level since December while optimism about a trade deal between the U.S. and China lifted the offshore Chinese yuan to a one-month high.
(Reporting by Jaspreet Kalra; Editing by Ronojoy Mazumdar)
