The Indian rupee opened higher against the U.S. dollar on Tuesday but was unable to sustain those gains and slipped back lower amid suspected intervention by the Reserve Bank of India.
The rupee opened at 81.9750 but soon pared those gains and slipped to 82.0350 by mid-morning. Traders said they believe the central bank was likely buying dollars to limit further appreciation in the rupee.
The RBI has consistently purchased dollars when the rupee strengthens beyond the 82 level, according to traders. The central bank has been on a "buying spree" near 81.90 in recent weeks despite the falling dollar index.
The dollar index was down around 0.22% on Tuesday, weighed by expectations the Federal Reserve may pause rate hikes after its next meeting. The euro and pound are gaining strength versus the dollar as the ECB and BOE are seen delivering more rate hikes.
U.S. retail sales and industrial production data due later Tuesday could impact the dollar ahead of the Fed's meeting next week. Indian rupee 1-year forward premiums edged up slightly by 2 basis points to 1.73%.
