Rupee Range-Bound vs US Dollar: Forex Market Update

Mumbai, Jun 24 (PTI) The rupee witnessed range-bound trading against the US dollar in early trade on Monday, amid a negative trend in the domestic equity market.

Forex traders said the strength of the American currency in the overseas market and elevated crude oil prices also weighed on the local unit and restricted the upmove.

At the interbank foreign exchange market, the local unit opened at 83.52 and gained further to trade at 83.45 against the greenback in initial deals, registering an increase of 12 paise from its previous closing level.

On Friday, the rupee hit the lowest level of 83.63 but finally settled at 83.57 against the dollar, registering a gain of 4 paise from its previous close.

"Price action on Friday seemed to indicate purposeful intervention by the central bank," IFA Global said in a research note, adding that the rupee is likely to trade in 83.40-83.67 range with sideways price action.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent higher at 105.82.

Brent crude futures, the global oil benchmark, fell 0.06 per cent to USD 85.19 per barrel.

"Indian rupee which gained slightly on Friday and is expected to remain range-bound with the Reserve Bank of India (RBI) sitting on the fence near to 83.60 to protect it after the USD/INR pair made an all-time low of 83.67 last week on constant equity-related outflows and the stronger dollar index," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

In the domestic equity market, the 30-share BSE Sensex fell 349.25 points, or 0.45 per cent, to 76,860.65. The broader NSE Nifty fell 103.15 points, or 0.44 per cent, to 23,397.95.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth Rs 1,790.19 crore, according to exchange data.

Meanwhile, India's forex reserves dropped by USD 2.922 billion to USD 652.895 billion for the week ended June 14, the Reserve Bank said on Friday.

In the previous reporting week, the kitty had jumped by USD 4.307 billion to USD 655.817 billion, a new all-time high after consecutive weeks of increase in the reserves.