Rupee trades narrow, settles 2 paise higher at 83.13 against dollar

The rupee stayed range-bound and settled 2 paise (provisional) higher at 83.13 against the US dollar on Wednesday.

Forex traders said the rupee is trading in a narrow range as positive domestic markets and a soft US dollar supported the rupee while rising crude oil prices and foreign fund outflows capped gains.

At the interbank foreign exchange market, the local unit opened at 83.15 against the greenback. The unit oscillated between an intraday low of 83.16 and a high of 83.11 against the greenback and finally settled at 83.13 against the dollar, higher by 2 paise (provisional) from its previous close.

On Tuesday, the rupee had settled at 83.15 against the US dollar.

"We expect the rupee to trade with a slight positive bias as the US Dollar has softened ahead of PMI data and gains in the Japanese Yen. Markets expect PMI data to be better than the previous month's reading. However, concerns over the Red Sea region and elevated crude oil prices may cap the sharp upside," said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.

Traders may remain cautious ahead of PMI data from Germany, the Eurozone, the UK and the US today. Investors may remain cautious ahead of the US GDP and ECB monetary policy decision on Thursday. USD/INR spot price is expected to trade in a range of Rs 82.90 to Rs 83.50.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.48 per cent lower at 103.11 on Wednesday.

"US Dollar declined on strong Yen on rising expectations that Bank of Japan may normalise its monetary policy in the coming months," Choudhary added.

Brent crude futures, the global oil benchmark, surged 0.35 per cent to USD 79.83 per barrel.

On the domestic equity market front, Sensex advanced 689.76 points, or 0.98 per cent, to 71,060.31 points. The Nifty climbed 215.15 points, or 1.01 per cent, to 21,453.95 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 3,115.39 crore, according to exchange data.