By Jaspreet Kalra
The Indian rupee eked out gains on Tuesday, tracking an uptick in most Asian peers even as dollar demand from merchant payments and maturing non-deliverable forward contracts limited room for the currency to gain.
The rupee FX_IDC:USDINR traded at 95.28 against the dollar as of 11:25 am IST, up 0.1% from its previous close.
The RBI's daily reference rate, called the daily fix, was last quoted at a premium of around 0.45/0.55 paisa, signalling elevated dollar demand. The fix usually attracts concentrated dollar buying or selling related to maturing contracts.
"Despite the central bank's interventions and measures to boost flows, (the) rupee is struggling to cling to gains, which points to the scale of underlying USD demand," a trader at a foreign bank said.
Analysts and traders are keeping a close eye on the scale of inflows mustered by recent policy measures such as removing tax on foreign investment in debt and offering foreign currency deposits with high interest rates. Goldman Sachs anticipates about $60 billion of inflows over the remainder of 2026.
In the near-term though, FX advisory firm Mecklai says that the dollar-rupee pair is trading with a "neutral to bullish" bias and is expected to encounter resistance in the 95.50-95.80 zone, while support is pegged in the 94.0-93.90 band.
Elsewhere, Asian currencies were mostly trading firmer, while regional stocks fell. Indian equities bucked the trend with the Nifty 50 index NSE:NIFTY up 0.4%.
Investors are now looking ahead to the release of the minutes of the U.S. Federal Reserve's June meeting, due Wednesday. Traders are currently pricing in about 30 bps of rate hikes in the rest of 2026.