Rupee inches up as Asian currencies notch marginal gains

A customer hands a 50-Indian rupee note to an attendant at a fuel station in Ahmedabad

By Anushka Trivedi

MUMBAI (Reuters) - The Indian rupee eked out slim gains on Thursday in its penultimate trading session of 2022, as Asian markets rebounded to move higher and the dollar flatlined.

The rupee ended at 82.7975 per dollar against its previous close of 82.8575. The currency moved in a nine paisa range during the session - its narrowest this week.

The Indonesian rupiah and the South Korean won reversed course, while the Singapore dollar added to gains as the Chinese yuan settled 0.2% higher in thin-volume trading.

Most Asian equities too recovered or pared early losses.

The dollar index was trapped in a range to stay little changed.

Markets were conflicted. China's move to reduce COVID restrictions could boost economic activity, but a recent surge in cases was straining the country's healthcare system and sparking fears of the virus spreading to other countries.

United States, India, Japan and other countries have imposed restrictions on travellers from mainland China.

These curbs show there's worry around the infection spreading, and worsening of the situation could lead to "supply-side constraints kicking in and inflationary pressures returning," said Ritesh Agarwal, head of treasury at CTBC Bank.

In the domestic currency market, there are some "genuine" dollar sales, but volumes are very thin and there will not be much action for the remainder of the week, said a trader with a private bank.

The rupee should end the year around current levels, another trader said, as the focus has shifted to January when investors will start returning from holidays and build fresh positions.

The currency's underperformance over the past two months has put it on track to end 2022 as the top percentage loser in Asia with declines of about 11%.

(Reporting by Anushka Trivedi; Editing by Janane Venkatraman)