MUMBAI - The Indian rupee was held in a tight range on Thursday as dollar selling intervention by the central bank offset early losses in the currency on the back of weakness in its Asian peers, traders said.
The partially convertible rupee was trading litle changed on the day at 79.97/98 per dollar by 0550 GMT, compared with its close of 79.99 on Wednesday.
Earlier in the day, it fell to 80.05, just shy of its record low of 80.0650 touched on Tuesday.
Traders said there was some dollar selling spotted above 80 levels by state-run banks, likely on behalf of the central bank, but gains in the domestic share market and losses in the dollar against the euro helped limit a sharper fall.
"We sense that the worst is priced in the currency, with the value likely to be peaking around 80.5-81.0 against the greenback," Hitesh Jain, senior vice president, institutional research at Yes Securities said in a note.
"We say this because there is a growing indication that inflation across the globe has peaked given the wide retreat in food prices, oil and other industrial commodities," he added.
Analysts said foreign portfolio outflows from the domestic share market have also slowed in July but it is still too early to say the trend has reversed.
Foreign investors have dumped nearly $30 billion worth of Indian shares so far in 2022, adding to the downward pressure on the rupee.
However, investors will remain wary of the central bank after a source said the RBI was prepared to sell another $100 billion to defend the rupee.
The RBI will announce its next policy decision in early August. The market broadly expects to see another 50 basis point rate increase after retail inflation stayed above 7% in June, the sixth straight month it has been above the RBI's upper tolerance level of 6%.
The benchmark 10-year bond yield was trading 1 basis point higher on the day at 7.46%.
(Reporting by Swati Bhat, Editing by Shri Navaratnam and Kim Coghill)