INDIA RUPEE-Rupee up marginally on feeble dollar; gains capped by month-end dollar bids

By Jaspreet Kalra

MUMBAI, Jan 28 (Reuters) - The Indian rupee rose slightly on Wednesday as the dollar tumbled to a nearly four-year low but the currency stayed in a tight band, unable to join its Asian peers' gains, on month-end dollar demand from corporate firms.

The rupee INR=IN was last up 0.1% to 91.6350 per dollar as of 10:50 a.m. IST, lagging behind the sharp gains in most regional peers.

The U.S. dollar struggled near four-year lows against major peers on Wednesday after President Donald Trump brushed off its recent weakness, exacerbating the dollar-selling and helping lift currencies such as the euro, Korean won and the Chinese yuan.

However, the rupee was unable to catch this tailwind due to corporate dollar demand related to month-end needs and repayments of offshore borrowings, traders said.

A broadly weaker dollar gives rupee some relief from the risk of hitting new record lows but it's unlikely to be a catalyst for a meaningful recovery, a trader at a state-run bank said.

A turnaround, analysts reckon, is likely only if the capital flows picture for the INR improves. Foreign investors have sold $4 billion of local stocks on a net basis over January so far, adding to the record annual outflow of $19 billion in 2025.

"Continued central bank presence in the market, combined with a softer dollar backdrop, may help stabilise the USD/INR pair and gradually pull it back toward the 90.80–91.00 zone in the near term," said Amit Pabari, managing director at FX advisory firm CR Forex.

Investors will now turn their attention to the Federal Reserve's policy decision due later on Wednesday.

No change in policy rates is expected but Fed Chair Jerome Powell's comments will be in focus to gauge his views on ongoing threats to central bank independence and how well his commentary aligns with the rate path money markets are pricing.