Rupee rises 5 paise to 86.55 against dollar on decline in crude prices

The rupee appreciated 5 paise to close at 86.55 (provisional) against the US dollar on Monday, as an overnight decline in crude oil prices and the US dollar index supported investor sentiments.

Besides, a positive trend in domestic equities also helped the local currency, 

  Forex traders said the rupee is likely to trade within a volatile range of 86.20-86.80 ahead of key events in the global and domestic economic landscape.

At the interbank foreign exchange, the rupee opened on a strong note at 86.48 against the greenback. During the day, the local unit touched an intraday high of 86.46 and a low of 86.57.

It finally closed at 86.55 (provisional), a rise of 5 paise against the US dollar.

In the previous session on Friday, the rupee settled at 86.60.

According to Anuj Choudhary Research Analyst at Mirae Asset Sharekhan, the rupee strengthened against the greenback on the weak tone in the US Dollar index and positive domestic markets. Overnight decline in crude oil prices also supported the rupee.

"We expect the rupee to remain weak on underlying strength in the US Dollar and importer demand for Dollars. However, any further correction in crude oil prices and extended gains in the domestic markets may support the rupee at lower levels," Choudhary said.

The US markets will remain closed due to the Martin Luther King Junior Day holiday.

USD/INR spot price is expected to trade in a range of 86.40 to 86.75.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading down 0.17 per cent to 109.16.

Brent crude, the global oil benchmark, fell 0.50 per cent to USD 80.39 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex rose 454.11 points, or 0.59 per cent, to settle at 77,073.44 points, while the Nifty rose 141.55 points, or 0.61 per cent, to 23,344.75 points.

Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Friday, as they offloaded shares worth Rs 3,318.06 crore, according to exchange data.

On the domestic macroeconomic front, India's forex reserves dropped by USD 8.714 billion to USD 625.871 billion in the week ended January 10, the RBI said on Friday.

Earlier, the overall kitty dropped by USD 5.693 billion to USD 634.585 billion in the week ended January 3, the Reserve Bank of India said.