The Indian rupee weakened on Thursday despite broad gains in Asian currencies, which were pushed higher by improved odds of the Federal Reserve cutting policy rates later this year.
The rupee was at 83.43 against the US dollar as of 09:35 a.m. IST, down from its close at 83.37 in the previous session.
While the currency came under pressure following a weaker-than-expected showing by the Prime Minister Narendra Modi-led coalition in the national elections on Tuesday, it partially recovered in the following session after intervention from the Reserve Bank of India.
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Traders expect the central bank to continue acting against sharp declines in the rupee but sustained equity related outflows may keep up pressure on the currency.
Foreign investors have net sold over $2 billion worth of Indian equities over the last two trading sessions. Benchmark Indian equity indices, the BSE Sensex and Nifty50, were up about 0.7 per cent each in early trading.
"With RBI firmly in saddle ... the range for now looks to be broadly between 83 to 83.50," Anil Bhansali, head of treasury at Finrex Treasury Advisors said.
Meanwhile, dollar-rupee forward premiums ticked higher with the 1-year implied yield up 2 basis points (bps) at 1.66 per cent after US bond yields slipped following economic data which bolstered hopes that the Fed would cut rates twice this year.
The dollar index fell 0.1 per cent to 104.1 and most Asian currencies gained.
Expectations that the central bank will intervene to cap rupee weakness is also likely to spur "natural offers (to sell dollars)," near 83.50, a foreign exchange trader at private bank said.
Investors now await the RBI's monetary policy decision and the closely watched US non-farm payrolls report, both due on Friday.