By Swati Bhat
MUMBAI (Reuters) - The rupee closed little changed on Thursday as gains in the domestic share market were offset by the euro's fall versus the greenback.
The demand-supply in the market was also adequately matched, holding the pair in a fairly tight range for most of the day, dealers said.
"It was an absolutely dull day. There was bidding from importers all throughout while around 54.87/88 levels there was good supply from exporters as well," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with Andhra Bank.
"I expect the rupee to hold in a 54.60 to 54.95 range tomorrow as well, don't see an immediate breakout from this band," he added.
The partially convertible rupee closed at 54.7750/7850 per dollar compared with 54.78/79 on Wednesday. The pair moved in a 54.6525 to 54.8950 range during the session.
The dollar was near a six-week high against the euro and a 4-1/2-year peak against the yen on Thursday on prospects of more monetary easing in the euro zone and scaled back asset buying in the United States.
The unexpectedly sharp fall in Indian wholesale inflation for April prompted many economists to change their policy rate cut views, according to a Reuters poll on Thursday. Seven out of 14 economists who had earlier said the Reserve Bank of India would not ease policy at a June 17 meeting now do expect a cut in the repo rate.
The Nifty rose to its highest in 2-1/2 years, as lenders continued to rally on rate cut expectations, while four additions to the MSCI India index, including Wockhardt, also gained.
Foreign funds have bought shares and debt worth nearly $18 billion so far in 2013, but that has not had much impact on the rupee as concerns over the wide current account deficit and high gold imports have been weighing.
The rupee is up just about 0.4 percent so far in 2013.
"While foreign fund inflows have been supporting the rupee, the rupee is likely to remain under pressure given the increase in imports, especially gold and the upward movement in the global crude oil prices," Dun and Bradstreet said in a note.
"D&B expects the rupee to average at around 54.00-54.20 per dollar during May 2013," the note added.
In the offshore non-deliverable forwards, the one-month contract was at 55.04 while the three-month was at 55.53.
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 54.89 with a total traded volume of $4.64 billion. (Editing by Anupama Dwivedi)