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INDIA RUPEE - Rupee trapped in narrow band with greater exporter than importer interests

The Indian rupee was confined to a narrow range of trading on Thursday. It was supported by modest dollar exports, but Asian currencies were weaker and there wasn't much demand from importers.

The local currency opened slightly higher, and briefly extended its advance before hitting resistance at 85.80. The last time it was quoted at 85.8525, at 11:08 am IST, the unit rose 0.1% on Wednesday.

The rupee has largely stayed within the 85.70 to 86 range throughout the week.

A FX salesperson from a private bank said that the dollar/rupee is stuck in an extremely tight range. "There's no real impulse to break out either way," he added.

Exporters are more active today than importers on our side. This could change if we see the pair dip towards 85.70.

The dollar index is choppy, which has led to the rupee's narrow range. Dollar index dropped initially on Wednesday, following a report claiming that U.S. president Donald Trump may fire Federal Reserve chair Jerome Powell. However, it bounced back after Trump denied the report.

He reiterated his criticisms of Powell for not reducing rates, and confirmed that he had spoken to Republican lawmakers about Powell's removal.

"A potential firing of Fed Chair Powell or attempts to undermine Fed's independent could lead to a worsening of the market," MUFG bank said in a report.

It said that Trump's actions have created a serious downside threat, which the markets will closely monitor.

The Fed's September meeting is expected to be a time of interest rate cuts. In spite of this, Asian currencies were mainly weaker for the day. (Reporting and editing by Harikrishnan Nair; Nimesh Vora)

(source: Reuters)