The Indian rupee closed unchanged on Tuesday after hovering in a narrow range through the day's session as traders awaited the release of U.S. inflation data which may modestly spur the local unit but is not expected to cause sharp moves.
The rupee ended at 83.0025 against the U.S. dollar. The currency hovered between 82.9875 and 83.0250 during the day.
The dollar index edged higher to 104.2, while most Asian currencies were rangebound, save for the Thai baht, which was up 0.4%.
The rupee continues to see "muted price action" around the 83-handle, a foreign exchange trader at a private bank said.
Don't expect the U.S. inflation data to have an outsized impact on the rupee but an upside surprise could push the local unit to weaken slightly towards 83.20, the trader added.
Economists polled by Reuters expect month-on-month core consumer price inflation (CPI) in the U.S. to have remained steady at 0.3% in January.
On a year-on-year basis, headline CPI inflation is expected to have fallen to 2.9% from 3.4% in December.
The "consensus still suggests that the rupee is unlikely to face wide swings" post the U.S. CPI print, Arnob Biswas, head of foreign exchange research at SMC Global Securities, said.
The inflation print will also impact expectations of when the U.S. Federal Reserve may begin easing policy rates.
Previously, a string of strong U.S. economic data and pushback from Fed officials have prompted investors to pare bets on aggressive rate cuts.
Investors are currently pricing in a nearly 56% chance of a rate cut in May, down from about 66% a week earlier, according to CME's FedWatch tool. (Reporting by Jaspreet Kalra; Editing by Sohini Goswami)