The rupee traded in a narrow range and slipped 1 paisa to close at 83.96 against the US currency on Monday as support from a positive trend in equity markets was offset by a strong US dollar against major foreign currencies.
Concerns over global economic growth are weighing on investor sentiment, traders said, adding that investors remain cautious ahead of the US CPI and the European Central Bank’s (ECB) monetary policy this week.
At the interbank forex market, the local currency opened at 83.96 against the US currency. It hit an intraday high of 83.86 but pared its gains to settle at 83.96 against the US dollar, down one paisa from its previous close.
On Friday, the rupee gained 2 paise to close at 83.95 against the US dollar.
« The Indian rupee strengthened slightly, supported by expected intervention by the Reserve Bank of India (RBI) in recent weeks. This was despite Asian currencies slipping on fears of a slowdown in the United States after data released on Friday stoked fears of a slowdown in the United States.
“Market participants noted that the Indian central bank has been “consistently supportive” of the rupee to help it stay above 84,” said Maneesh Sharma, Assistant Vice President – Commodities and Currencies, Anand Rathi Shares and Stock Brokers.
Globally, attention remains focused on whether the Federal Reserve will deliver a 25 or 50 basis point (bps) rate cut at its policy decision next week, which could keep the dollar index tilted in favor of bears, traders said.
Meanwhile, the rupee is likely to be supported by inflows from local IPOs this week, while keeping an eye on US consumer inflation data for August, due on Wednesday.
Meanwhile, in domestic equity markets, the Sensex climbed 375.61 points, or 0.46 per cent, to settle at 81,559.54 points, while the Nifty rose 84.25 points, or 0.34 per cent, to close at 24,936.40 points.
The dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.37% to 101.54.
Brent crude oil, the international benchmark, rose 0.97% to 71.75 points in futures trading.
Foreign institutional investors (FIIs) were net sellers in financial markets on Friday as they sold shares worth Rs 620.95 crore, according to exchange data.
Meanwhile, India’s foreign exchange reserves jumped by $2.299 trillion to a new high of $683.987 billion for the week ended August 30, according to data released by the RBI on Friday.
Over the previous week, foreign exchange reserves had jumped by $7.023 billion to a peak of $681.688 billion.