BENGALURU, Sept 5 Reuters The Indian rupee will be confined to a narrow trading range against the U.S. dollar over the coming year as the Reserve Bank of India continues to intervene in the market to shield the currency from volatility, a Reuters poll of FX analysts showed.

The dollar fell more than 2 against other major currencies in August, providing breathing space for some emerging market ones. The rupee slipped to an alltime low of 83.97 to the dollar but is down only around 1 so far this year.

That relative stability has been primarily driven by a known pattern of the RBI intervening in FX markets. Its foreign exchange reserves hit a record high of 681.69 billion at the end of last month revealing the central bank has been buying dollars amid expectations for rate cuts by the U.S. Federal Reserve.

The Indian currency was expected to strengthen from Wednesday39;s rate of 83.96 to the dollar to 83.75 by the end of November and 83.60 in six months and remain there in a year, the Aug. 24 Reuters poll of 45 foreign exchange analysts found.

Even though the dollar has eased, the rupee has refused to strengthen in line. This is something we had expected in the sense the Reserve Bank of India remains very much present in the market, Dhiraj Nim, economist at ANZ, said.

The RBI has got the formula that has worked well for them … they would continue with their twosided intervention of buying and selling FX to keep the rupee in that narrow range and continue to test this…