MUMBAI, May 4 (Reuters) - The Indian rupee was little changed at close on Thursday in a holiday-shortened week, as likely dollar purchases by the central bank offset foreign inflows into the domestic equity market.
The rupee ended at 81.80 compared with 81.8175 in the previous session despite the U.S. Federal Reserve changing its forward guidance to indicate a conditional pause.
The Reserve Bank of India (RBI) likely stepped in to cap the rupee's sporadic upside through the week, traders said.
There were dollar bids from oil marketing companies seen on Thursday, two traders said.
"The Indian rupee continues to behave in a range-bound manner, thanks to the RBI's intervention. But an improving balance of payments position bodes well in the medium-term, although gains will likely be limited," John Bromhead, FX strategist and macro economist at ANZ, said at the Reuters Global Markets Forum on Thursday.
For the week, the rupee fell 0.03% to the dollar and was in a range of 81.945 to 81.66. India's forex markets were off on Monday and are shut again on Friday for a local holiday.
The dollar index recovered slightly on Thursday after falling 0.6% in the previous session.
Meanwhile, Indian equities received inflows worth 33.35 billion rupees ($407.71 million) this week as of Wednesday.
Markets did not price in a significant surprise over rate hikes by the Federal Reserve compared with previous meetings, said Anand James, Chief Market Strategist at Geojit Financial Services, as he pointed towards the rupee's subdued reaction despite the U.S. central bank hinting at pausing its aggressive tightening cycle.
The European Central Bank will announce its rate decision later in the day. Market positioning is for a 25 basis point hike, though it reflects a chance of a 50 bps increase.
($1 = 81.7975 Indian rupees)
