The Indian rupee ended unchanged o n Wednesday as the positive impact from gains in the euro after Moody's affirmed Spain's investment grade rating was offset by dollar demand from oil and defence-related companies.
After a 5.1 percent gain in September, traders expect a period of consolidation in the rupee, with stocks volatile in the corporate earnings reporting season and in the lead up to the Reserve Bank of India's policy review on Oct. 30.
The global risk environment also remains uncertain, as investors continue to wait to see if Spain will ask for a bailout.
"Heard of some defence buying today which hurt the rupee. I expect 52.00 to be bottom for the USD/INR while 53.60 would be the cap," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
The partially convertible rupee closed at 52.87/88 per dollar, steady from its previous close. The pair moved in a wide range of 52.6750 to 52.97.
The euro hit a one-month high against the dollar on Wednesday as Moody's action soothed concerns about a move of Spain to junk status, while broad losses in the dollar and gains in other Asian peers also helped the rupee early in the session.
However, gains in the local currency were capped by suspected dollar purchases from a large aircraft manufacturing firm. Traders also spotted some oil-related buying as well as from foreign banks, which were seen offsetting positions in offshore markets.
In the offshore non-deliverable forwards market, the one-month contract was at 53.12 while the three-month was at 53.64.
In the currency futures market, the most-traded near-month dollar/rupee contract on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 52.96 with a total traded volume of around $4.17 billion.