The Indian Rupee depreciated by 2 paise to 83.95 against the US dollar in early trade on Wednesday, weighed down by a muted trend in domestic equities. Experts believe the RBI is intervening to prevent further depreciation.
Forex traders said from a macroeconomic standpoint, the rupee’s downside appears well-contained, with the 84-level acting as a crucial support, likely bolstered by expected RBI intervention to prevent further depreciation.
At the interbank foreign exchange market, the local unit opened at 83.94, then lost further ground and touched 83.95, registering a loss of 2 paise from its previous close.
On Tuesday, the rupee depreciated by 6 paise to close at 83.93 against the American currency.
According to CR Forex Advisors MD Amit Pabari the Reserve Bank’s interventions not only seem to limit the rupee’s downside but also cap its appreciation.
“This was evident earlier in the week when, despite significant dollar weakness, the rupee remained steady, unlike other emerging market currencies that experienced notable gains,” Pabari said.
The rupee is expected to trade within a narrow range in the near term, with an upside limit around 83.80 and solid support near 84.05, with a broader range of 83.60 to 84.05 in the medium term, Pabari added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, gained 0.17 per cent to 100.72 points.
Brent crude, the international benchmark, gained 0.14 per cent to USD 79.66 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex fell 43.51 points, or 0.05 per cent, to 81,668.25 points, while the Nifty was down by 21.85 points, or 0.09 per cent, to 24,995.90 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 1,503.76 crore, according to exchange data.
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