Rupee stuck in a band against dollar in early trade

Posted on by

The rupee witnessed range-bound trading against the US dollar in early trade on Monday, weighed down by a negative trend in domestic equities and the strength of the American currency in the overseas market.

Forex traders said the safe-haven dollar gained ground amidst heightened concerns in West Asia.

At the interbank foreign exchange, the rupee opened at 83.24 against the dollar, then touched 83.23, registering a rise of 4 paise over its previous close.

On Friday, the rupee declined 2 paise to settle at 83.27 against the US dollar.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.26 per cent to 106.32.

Brent crude futures, the global oil benchmark, advanced 3.69 per cent to $SD 87.70 per barrel.

According to CR Forex Advisors MD-Amit Pabari, market sentiment turned delicate following clashes between Israeli forces and Hamas over the weekend, coinciding with a surprise attack by militants on Israel, marking the deadliest day of violence in the region in half a century.

“Global tensions propel safe-haven dollar, while RBI’s vigilant stance sparks a currency market tug-of-war,” Pabari added.

The USD/INR pair is encountering notable resistance at the 83.30 level, while concurrently finding support around 82.80. This creates a scenario akin to a tug-of-war, where a breach of either pivotal level could trigger a significant movement, with an estimated range of approximately one rupee in either direction, he said.

In the domestic equity market, the 30-share BSE Sensex declined 274.33 points or 0.42 per cent to 65,721.30. The broader NSE Nifty fell 84.10 points or 0.43 per cent to 19,569.40.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on Friday as they offloaded shares worth Rs 90.29 crore, according to exchange data.

Meanwhile, India’s forex reserves dropped further by $3.794 billion to $586.908 billion for the week ended September 29, the Reserve Bank said on Friday.

In the previous reporting week, overall reserves had declined by $2.335 billion to $590.702 billion as of September 22.