MUMBAI, Dec 26(Reuters) - The Indian rupee ended a tad lower on Friday and posted a weekly loss, as steady dollar demand from corporates and in the non-deliverable forwards market chipped away at gains fuelled by aggressive central bank intervention.
The rupee closed at 89.85 per dollar, marginally weaker than 89.7850 in the previous session
The currency fell 0.6% on the week, reversing course after rising more than 1% last week when the central bank stepped in to shore it up from record lows.
On Friday, the rupee held in a narrow range and avoided deeper losses supported by dollar sales from state-run banks around 89.90, near the day’s low, traders said.
A few maturing positions in the NDF market next week could add pressure and pull the rupee back below 90.50, a trader at a large private bank said.
"Further gradual depreciation is expected until a favourable trade deal with the U.S. boosts the currency. Even if the INR strengthens, we expect the RBI to use the opportunity to increase its FX reserves," analysts at ANZ said in a note.
India's foreign exchange reserves stood at nearly $689 billion as of December 12, per central bank data.
Dollar-rupee forward premiums meanwhile continued to retreat with the 1-year implied yield down about 10 basis points at 2.74%.
Traders pointed to cutting of stop-losses on paid positions that amplified the fall in premiums after the RBI's announcement of an FX swap eased concerns over excess dollar liquidity in the system.
In broader markets, Asian currencies were mostly range bound while the dollar index lumbered near a two-month low and was on course to log its fourth weekly fall in the last five weeks.
Reporting by Jaspreet Kalra; Editing by Nivedita Bhattacharjee
Source: Reuters