By Siddhi Nayak

MUMBAI (Reuters) – The Indian rupee fell to a record low tardy on Wednesday after another session of range-bound trading, staying between negative global signals and support from the central bank.

The rupee hit an all-time low of 83.98 per US dollar in the last minute of trade. It closed at 83.9650, down from its previous close of 83.9675, remaining in a narrow three-paisa range throughout the session.

“It is quite clear that the RBI (central bank) is defending the rupee,” said a trader at a private bank. “If it allows the rupee to move below 84, the dollar bulls will be active and a move towards 84.25 will be swift.”

There have been several instances in the last month when the Reserve Bank of India intervened on both sides of the forex market to support the currency.

This has led to the rupee remaining in a tight range for a long time. It has been hovering in the 20 paisa range for the past month.

Meanwhile, overnight weakness in US stocks spilled over to Asian and European stocks following the release of data indicating continued weakness in manufacturing activity.

The data raised the probability of a 50 basis point interest rate cut at the Federal Reserve’s Sept. 17-18 meeting from 30% to 42%, according to data from the CME FedWatch tool.

“With the Federal Reserve’s monetary policy meeting coming up in two weeks, the market has already priced in a 25 basis point rate cut,” said Amit Pabari, managing director at CR Forex.

“However, any further deterioration in the data could reignite concerns, which could prompt the Fed to consider a larger 50 basis point cut.”

More clues about the Fed’s monetary policy turnaround will come from Friday’s U.S. payroll data, which is likely to set the tone for global interest rates going forward. (This story has been refiled to add omitted words like “hit on” in paragraph 2)