(Reuters) - The Indian rupee closed little changed against the U.S. dollar on Tuesday, as strong demand for dollars from oil companies and other importers prompted the local unit to surrender earlier gains.
The rupee closed at 82.36 per dollar, compared with 82.3500 in the previous session.
The local unit hit a one-and-half-week high of 82.0350 earlier in the session, before giving up the gains due to the dollar demand from oil refiners and other importers looking to hedge near-term payments, traders said.
The rupee has been relatively stable in recent sessions, after the volatility that took it to a record low of 82.6825 on Monday last week. The Reserve Bank of India's intervention via forward dollar sales has helped arrest the rupee's slide.
Still, analysts reckon that the rupee will likely add to its 10.5% decline so far this year.
Dips in the USD/INR "should be taken as an opportunity to buy," said Amit Pabari, managing director at CR Forex Advisors.
"Until the global turmoil eases out and the trend changes across, pressure on the rupee will remain."
Pabari expects the rupee to move to 83.00-83.50 in the short term.
The rupee's climb to near 82 earlier in the session was aided by investors' relatively stronger risk appetite. U.S. equity futures extended their overnight rally, while Indian and European equities also rose.
Risk assets got a boost initially from Britain's new finance minister Jeremy Hunt scrapping proposed tax cuts and later from a Financial Times report that said the Bank of England was likely to push back the start of its sales of government bonds.
The BoE, however, later said the FT report was inaccurate.
Rupee forward premiums inched higher, with the 1-year implied yield recovering from 11-year lows.
Open interest on USD/INR futures on the NSE fell, likely due to traders taking advantage of the dip to 82 to lock in profits on dollar short positions.