The Indian rupee closed little changed on Tuesday as lingering pressure on the currency was blunted by likely central bank intervention across the local spot and non-deliverable forward market, traders said.
Worries about limited progress in US-India trade negotiations have been a drag for the rupee since steep tariffs went into effect in late August, while importer dollar demand has also remained elevated.
The rupee closed at 88.2650 against the US dollar, nearly flat compared to its close at 88.2450 in the previous session. It had declined to a two-week low of 88.40 in early trading.
The Reserve Bank of India likely intervened to support the rupee, five traders said, with two also pointing out that the central bank was active across the spot and NDF markets.
The central bank's presence in NDF "appears to be quite strong but the upward pressure (on USD/INR) is likely to persist," a trader at a private bank said.
In addition to dollar demand from local corporates, bids for the greenback related to maturity of NDF positions are also likely to be a sore spot for the rupee in the near term, the trader said.
India's benchmark stock index Nifty 50 closed down 0.1% on the day, tracking declines in regional stocks.
The dollar index was steady on Tuesday while the onshore Chinese yuan ended its domestic trading session at the strongest level since November 2024.
Investors are keeping their focus on U.S. President Donald Trump's Asia visit for signs of a breakthrough in trade talks with China as Trump and Chinese President Xi Jinping meet in South Korea on Thursday.
"Optimism remains intact that President Trump and Xi can agree on a meaningful trade truce ... we remain very much focused on what happens to China's threat of stringent controls on rare earth exports," analysts at ING said in a note.
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