* Rupee ends at 63.38/39 per dlr versus Tuesday's close of
* FOMC meeting outcome key for global markets and currencies
* INR expected to touch 65/dlr if Fed tapering around $15
By Swati Bhat
MUMBAI, Sept 18 (Reuters) - The Indian rupee closed largely
steady on Wednesday as caution prevailed ahead of the U.S.
Federal Reserve's policy meeting outcome later in the day, but
gains in the domestic sharemarket and other Asian currencies
helped through the most part.
Asian markets kept their nerve, counting on the Fed for only
a modest scaling back of its stimulus, though all assets were
vulnerable to any hint of hawkishness from the world's most
powerful central bank.
The Federal Open Market Committee (FOMC) is expected to be
measured with any cuts to its $85 billion in monthly
asset-buying, while also seeking to reassure investors that the
day of an actual policy tightening is still distant.
On the domestic front, views on the Fed's tapering ranged
from $5 billion to $15 billion a month.
"I don't really think markets have factored in a very large
tapering of the monetary stimulus. Any tapering will be a
dampener, but if it is as large as $15 billion like some people
are expecting, the rupee will touch 65," said Ashtosh Raina,
head of foreign exchange trading at HDFC Bank.
The partially convertible rupee closed at 63.38/39
per dollar compared with 63.37/38 on Tuesday. The unit moved in
a range of 63.04 to 63.45 during the session amid thin volumes.
The outcome of the Fed's meeting will be crucial for the
Reserve Bank of India's policy review on Friday.
India's new central bank chief Raghuram Rajan is expected to
leave key policy rates unchanged at his first monetary policy
review on Friday, and continue with emergency cash tightening
measures initiated in mid-July to stabilise the rupee,
and check racing inflation, according to a Reuters poll.
Of the 52 economists polled, 50 expect the policy repo rate
to remain at 7.25 percent, while 47 of 48 respondents see the
cash reserve ratio, or the portion of deposits banks have to
maintain with the RBI, unchanged at 4 percent.
Traders said gains in the domestic sharemarket also aided
sentiment, with dollar sales from custodian banks helping.
Shares rose nearly 1 percent to mark their second straight
day of gains on continued foreign inflows, while stocks
perceived as defensive gained ahead of the Fed meeting's
In the offshore non-deliverable forwards, the
one-month contract was at 64.05, while the three-month was at
In the currency futures market, the most-traded
near-month dollar/rupee contracts on the National Stock
Exchange, the MCX-SX and the United Stock Exchange all closed at
around 63.43 with total traded volume of $1.9 billion.
(Editing by Prateek Chatterjee)