MUMBAI, Dec 27 Reuters The Indian rupee weakened on Wednesday, pressured by dollar demand from large foreign banks, even as most of the local unit39;s Asian peers ticked higher.

The rupee was at 83.2475 against the U.S. dollar as of 1000 a.m. IST, lower by 0.07 compared to its close of 83.1925 in the previous session.

The dollar index was little changed in Asian hours at 101.5 but continues to hover close to its weakest level since late July. Most Asian currencies were up between 0.1 to 0.5 on the day.

But the rupee weakened slightly due to dollar demand from large foreign banks, likely on behalf of custodian clients, a foreign exchange trader at a staterun bank said.

The price action on the rupee is likely to be driven by merchant flows as speculative activity remains muted towards the yearend, the trader said.

Amid muted volatility due to the holiday season, the rupee39;s intraday range will be confined to 1015 paisa, said Amit Pabari, managing director at fx advisory firm CR Forex.

India39;s current account deficit fell more than expected in the JulySeptember quarter, to 8.3 billion, 1 of GDP, from 9.2 billion, or 1.1 of GDP, in the preceding quarter.

The median forecast in a Reuters poll of 18 economists was for a deficit of 9 billion.

With the capital account surplus barely edging over the current account deficit, the overall balance of payments stayed in a small surplus, but should improve, Barclays said in a note.

Meanwhile, rupee forward premiums inched…