The Indian rupee on Wednesday held near Tuesday's 1-1/2-month low against the US dollar with no big surprise expected at the Fed meeting later in the day and investors hopeful that inflows will continue despite the prospect for a stronger dollar.

The continuing civil war in Iraq and the Ukraine crisis had pushed oil prices sharply higher of late and most emerging market currencies had fallen steeply after that.

The Indonesian rupiah fell beyond the 12,000 mark on Wednesday, its lowest in more than four months. Thailand's baht, Philippine's peso and Malaysia's ringgit - all traded lower against the US dollar on the day of the Fed policy but the Indian rupee managed to hold above Tuesday's low.

USD/INR traded in a range of 60.05-60.46 on Wednesday, below Tuesday's peak of 60.49, its highest since 29 April.

"Inflows from FIIs (foreign institutional investors), NRIs (non-resident Indians) and software exports remain strong over the last one-and-a-half year. It is helping rupee keep its strength despite the geopolitical issues," Harihar Krishnamurthy, Treasurer at First Rand Bank, told IB Times UK.

"Also, the Fed policy has been mostly priced in. The market sees only the same $10 billion tapering at Wednesday's review and expect it to stop buying assets from October," he said.

But when one ends, the other is opening, Krishnamurthy said, referring to the easing stance the European Central Bank has taken.

Traders expect the Indian currency to also find support from growing exports and improved competitiveness among its regional peers.

"Our exporters are able to find new markets and increase sales volume, and the weaker position of rupee compared to its competitors is helping them earn more," Krishnamurthy said.

Technical Outlook

USD/INR has broken above the downtrending channel on a weekly chart but it is facing a very strong resistance near 61.20-61.50, endorsed by the 50% Fibonacci retracement of the May-August 2013 uptrend.

Once the Iraq issues start receding, the rupee will reverse losses, traders said. MACD widening from its signal line also suggests a reversal of the recent short-term uptrend.

On the downside, the pair targets 59.59 and 58.23, ahead of 57.30, where the downward channel is set to complete its third wave.