The Indian rupee experienced range-bound trading and appreciated by 3 paise to reach 83.99 against the US dollar in initial transactions on Thursday. This modest gain is attributed to suspected intervention by the Reserve Bank of India (RBI) and a decline in oil prices, which provided support for the local currency.
Forex traders anticipate that the rupee will continue to fluctuate within a narrow range throughout the day. A robust dollar and a subdued outlook in domestic equities are expected to weigh on the rupee, while falling crude oil prices and potential RBI intervention may bolster the currency.
Opening at 84.01 against the greenback on the interbank foreign exchange market, the rupee briefly rose to 83.99, marking a 3 paise increase from its previous close. On Wednesday, the currency also saw limited movement, strengthening by two paise to settle at 84.02 against the dollar.
Currently, the dollar index, which measures the greenback’s performance against a basket of six currencies, stands at 103.59. Meanwhile, Brent crude oil prices marginally increased by 0.26 percent, trading at USD 74.41 per barrel in futures.
Amit Pabari, Managing Director of CR Forex Advisors, highlighted that India’s trade deficit significantly narrowed to $20.78 billion in September, down from a ten-month high of $29.65 billion in August. This easing of the trade gap alleviates some pressure on the rupee, offering it temporary relief.
Pabari also noted that recent declines in oil prices, down by 5 percent due to weakened global demand and reduced tensions in the Middle East, contribute to an optimistic outlook for the local currency.
Market participants are keenly watching the upcoming European Central Bank (ECB) monetary policy meeting and critical US economic data, which could further impact the rupee’s future trajectory.
On the equity market front, the Sensex fell by 281.66 points, or 0.35 percent, to 81,219.70 points, while the Nifty dropped by 129.35 points, or 0.52 percent, to 24,841.95 points. Foreign institutional investors (FIIs) were net sellers on Wednesday, offloading shares worth Rs 3,435.94 crore, as per exchange data.
In macroeconomic developments, India’s merchandise exports saw a slight uptick of 0.5 percent, reaching USD 34.58 billion in September, as the trade deficit narrowed to a five-month low at USD 20.78 billion. Official data indicate that imports rose by 1.6 percent to USD 55.36 billion in September compared to USD 54.49 billion in the corresponding period last year.
(With PTI inputs)
