Currency Market News: The rupee is trading in a narrow range against the dollar
The rupee saw moderate trade and fell 3 points to 84.07 against the US dollar in early deals on Wednesday, weighed down by foreign currency outflows and the strength of the US currency in the overseas market.
Forex dealers said the rupee is likely to trade in a narrow range during the day as a strong dollar and a muted tone in local unit-weighted domestic stocks, while weak crude oil prices and any intervention by the Reserve Bank of India (RBI) may also support the local currency at lower levels.
In foreign interbank exchange, the rupee opened at 84.03 against the greenback. In early trade, it touched 84.07, registering a fall of 3 paise over its previous close. On Tuesday, the rupee saw mixed trade and appreciated 1 paisa to 84.04 against the US dollar.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading 0.06 percent lower at 103.19. According to traders, the rupee remains under significant pressure, mainly due to foreign institutional investors (FIIs) withdrawing around USD 8 billion in October.
“The selling is due to profit booking by FIIs, as Indian stocks, after months of income reaching USD 25 billion, are now seen as overvalued. Adding to this pressure is the strong dollar index, which rose to a two-month high of 103.25, ” said MD Amit Pabari, CR Forex consultants.
Pabari also noted that despite these headwinds, the depreciation of the rupee appears to be limited, with the RBI ready to intervene if necessary. “Globally, oil prices fell 5 percent due to weak demand forecasts and reports that Israel is unlikely to target Iranian oil supplies, easing supply concerns,” he said.
Brent crude, the global oil benchmark, was up 0.26 percent to USD 74.44 per barrel in futures trading. On the domestic equity market front, the Sensex advanced 40.90 points, or 0.05 percent, to 81,861.02 points. The Nifty rose 11.45 points, or 0.05 percent, to 25,068.80 points. Foreign institutional investors (FIIs) were the biggest sellers in the capital market on Tuesday, as they sold shares worth Rs 1,748.71 crore, according to exchange data.
