MUMBAI - The Indian rupee closed little changed on Thursday as gains from softer crude prices and a sombre dollar were offset by weakness in the broader markets over worries of a slowdown in developed economies.
The rupee ended at 82.42 per dollar, against its previous close of 82.47, having traded in a narrow band all day.
State-run banks were seen bidding for dollars on behalf of oil marketing companies through the session as crude slumped, three foreign exchange traders confirmed.
The rupee was sold heavily ahead of the Reserve Bank of India's (RBI) decision on Wednesday, but has found some stability after the central bank hiked rates and took a hawkish stance.
The RBI's stance signals more rate hikes are on the cards and that has brought some relief to the local unit, said a trader with a private bank.
However, a strong rally can't be expected until the Federal Reserve meeting next week is out of the way, the trader added.
An overnight drop in U.S. yields and oil prices helped the currency, but the mood was tempered on concerns over higher interest rates sparking a recession in the United States and other developed economies.
Asian currencies closed between marginally weak to slightly higher, while global equities mostly declined. The Chinese yuan and shares fell, even as COVID rules were relaxed in the country.
The dollar index edged up 0.2% as investors balanced risks between upcoming rate hikes by the Fed and the recession it could induce.
Money markets see a 91% probability of the Fed raising rates by 50 basis points next week, and peaking at just under 5% in May.
USD/INR premiums were unchanged from Wednesday, with the 1-year forward implied yield holding the 1.76% level it jumped to after RBI's monetary policy decision.
(Reporting by Anushka Trivedi in Mumbai; Editing by Janane Venkatraman)