(Reuters) - The Indian rupee closed little changed to the U.S. dollar on Wednesday, surrendering earlier gains after foreign banks sold the greenback and on likely Reserve Bank of India intervention.
The rupee closed at 82.3150 per U.S. dollar, barely changed from 82.3125 on Tuesday, making it the third session in a row that the local unit has stayed afloat as the RBI's intervention helped cool intraday volatility.
Earlier in the session, the rupee had managed to reach 82.1650, getting a temporary boost from dollar sales by state-run banks, likely for the RBI, and by foreign banks, traders said.
The RBI is suspected to have intervened each day this week, selling dollars in spot and at the same time receiving in forwards, as it sought to halt the rupee's slide.
Rupee forward premiums have dropped, due to the RBI's interventions. The 1-year USD/INR implied yield fell to 2.76%, the lowest in almost two weeks.
Trader reckon that the next major move in the rupee would likely come after U.S. inflation data on Thursday, which will help assess the size of the rate hikes that the U.S. Federal Reserve is likely to deliver in November and December.
The base case right now is that the Fed will opt for a 75 basis points hike next month and follow it up with a 50-bps increase in December.
Meanwhile, India retail inflation data is due later in the day.
The rupee's Asian peers ended mixed, while oil prices were marginally higher. The dollar index dipped to near the 113 level.