Rupee edges higher in limited trade amid strong dollar and rising crude prices

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The Indian rupee saw a narrow trading range in early transactions on Monday, gaining just 1 paisa to reach 84.06 against the US dollar. This minor appreciation was affected by sustained foreign fund outflows and muted activity in domestic equities, as per PTI.

Forex experts noted that the rupee is likely to maintain a narrow range throughout the day, as the strength of the dollar and the rise in global crude oil prices weigh heavily on the currency. However, should the Reserve Bank of India (RBI) intervene, the rupee could receive some support at lower levels. According to PTI, at the interbank foreign exchange, the rupee opened slightly lower at 84.07 against the US dollar, before appreciating to 84.06, showing a marginal rise of 1 paisa from the previous close. On Thursday, it had also edged up by 1 paisa, to close at 84.07 against the dollar, PTI added. Friday's trading session was closed in observance of Diwali.

The rupee is hovering near its historic lows; on October 11, 2024, it recorded a closing low of 84.10 against the dollar. The dollar index, which gauges the strength of the dollar against a basket of six major currencies, was trading down by 0.62 per cent at 103.63, according to PTI reports.

Meanwhile, Brent crude prices surged by 1.52 per cent to USD 74.21 per barrel in futures trading, putting additional pressure on the Indian currency, as per PTI. Last week was relatively quiet in Indian markets due to Diwali celebrations, with limited volatility and restrained market movement. The USD-INR currency pair remained within a familiar range, largely due to the RBI's efforts to cap the rate near 84.10, said Amit Pabari, Managing Director of CR Forex Advisors, according to PTI.

This week, however, sees heightened interest as a series of high-profile IPOs come to market, with Swiggy's listing anticipated to raise around USD 1.3 billion. Analysts believe this could lend support to the rupee, with the USD-INR pair expected to range between 83.80 and 84.20, possibly with a slight downward bias, as per PTI.

In the equity markets, the Bombay Stock Exchange's Sensex index fell sharply by 703.89 points, or 0.88 per cent, settling at 79,020.23 points. Similarly, the Nifty index declined by 214.60 points, or 0.88 per cent, to 24,089.75 points. Foreign institutional investors (FIIs) were net sellers in the equity markets on Friday, offloading shares worth Rs 211.93 crore, according to PTI, citing data from the stock exchange.

Additionally, India's foreign exchange reserves took a hit, dropping by USD 3.463 billion to reach USD 684.805 billion in the week ending October 25, as per the RBI's announcement on Friday. In the previous week, reserves had fallen by USD 2.163 billion, reaching USD 688.267 billion, PTI reported. Reserves reached a record high of USD 704.885 billion at the end of September.

(With inputs from PTI)