The rupee ended flat on Thursday ahead of key economic growth data and a speech from Federal Reserve Governor Ben Bernanke, in what could be two events that break the recent range-bound trading in the local currency.
India is expected to post April-June quarter growth of 5.3 percent on Friday, the weakest in about three years, according to a Reuters poll of 38 economists.
However, any growth below 5 percent could present a tough choice to Reserve Bank of India Governor Duvvuri Subbarao, who has been persistent in his warnings about inflation even at the cost of sacrificing some near-term growth.
Global markets are also waiting to see whether Bernanke signals any further asset buying in his Jackson Hole speech on Friday.
"If the GDP number is poor, the dollar/rupee may make a immediate move to 55.80. But if rate cut hopes start building in, we may see some gains," said Naveen Raghuvanshi, associate vice president at Development Credit Bank.
"However, I would prefer going square ahead of Jackson Hole."
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The partially convertible rupee closed at 55.63/64 per dollar as per the SBI closing rate, compared to its 55.6250/6350 close on Wednesday.
The rupee has traded in a broad range since last month. A Reuters poll showed traders had cut most of bearish bets on the rupee to square positions, but that may change depending on the events ahead.
Onshore forward premiums were received after sustained paying over the past few sessions. The 1-year annualised premium closed at 6.18 percent versus 6.24 percent previously.
The one-month offshore non-deliverable forward contracts were quoted at 55.97 while the three-month was at 56.62.
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 55.87, w i th a total traded volume at $2.1 billion.