Rupee Remains Steady at 83.97 Against US Dollar

Mumbai, Aug 13 (PTI) The rupee witnessed range-bound trading and settled for the day on a flat note at 83.97 (provisional) against the US dollar on Tuesday, as weak domestic markets and a surge in crude oil prices weighed on investor sentiments.

Forex traders said risk aversion in the global markets amid heightened geopolitical tension in the Middle East between Israel and Iran also dented sentiments.

At the interbank foreign exchange market, the local unit traded in a tight range as it opened at 83.95 and finally settled at 83.97 (provisional) against the American currency, unchanged from its previous close.

On Monday, the rupee settled for the day lower by 2 paise at 83.97 against the American currency.

The local unit had slumped 37 paise to settle at an all-time low of 84.09 against the US dollar on August 5.

"We expect the rupee to trade with a slight negative bias on risk aversion in the global markets amid heightened geopolitical tension in the Middle East between Israel and Iran. Rising crude oil prices and weak domestic markets may also weigh on the domestic currency," said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

However, mixed-to-weak US dollar amid dovish comments from Fed speakers may support the rupee at lower levels.

Investors may remain cautious ahead of the US CPI, retail sales and consumer confidence data from the US this week, said Choudhary, adding that USD-INR spot price is expected to trade in a range of 83.75 to 84.25.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent higher at 103.19.

Brent crude, the global oil benchmark, declined 0.27 per cent to USD 82.08 per barrel.

On the domestic macroeconomic front, the net direct tax collection in the country grew 22.48 per cent to about Rs 6.93 lakh crore as of August 11 of this fiscal.

The retail inflation eased to 3.54 per cent with food prices falling after a good monsoon. It was the lowest in last 5 years and has dipped below RBIs targeted rate of 4 per cent.

However, India's industrial production slowed to a five-month low of 4.2 per cent in June 2024, mainly due to poor performance of the manufacturing sector, though power and mining sectors continue to perform well, as per official data released on Monday.

On the domestic equity market front, Sensex declined 692.89 points, or 0.87 per cent, to 78,956.03 points. The Nifty fell 208.00 points, or 0.85 per cent, to 24,139.00 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth Rs 4,680.51 crore, according to exchange data.