The rupee inched down 0.05% to 82.8825 per dollar by 10:55 a.m. IST, having fallen up to 82.90. It has moved in a narrow 8 paisa band so far.
A holiday lull has set in and volumes are very low, while there are no new triggers, said a foreign exchange trader.
For most of the session, the currency has traded near its support level of 82.85 per dollar. The next level to watch is now 82.90, around which the rupee was previously well supported thanks to the Reserve Bank of India’s actions, traders have said.
The dollar index was flat at 104.290 after China said on Monday it would scrap its Covid-19 quarantine rule for inbound travellers, even as Covid cases spike.
Asian shares were surrendering Tuesday’s gains, tracking a fall in US stocks as investors were divided over China’s policy shift, while most Asian currencies declined.
“China’s reopening is raising concerns that it would fuel global inflation further,” IFA Global Academy Research analysts wrote in a note.
High inflation woes have already led central banks globally to hike interest rates this year, but a spike in oil prices could add to the pressure.
Brent crude futures remained firm at around $84.40 per barrel on China demand optimism.
Coming off a holiday, benchmark US Treasury yields rose over 10 basis points overnight to hover near a five-week high of 3.86%, as investors continued to assess the Federal Reserve’s path for interest rates.
After a near three-month low, the 10-year yield has steadily climbed, with global central bank policy announcements prompting large gains till last week.