Rupee falls 4 paise against US dollar due to muted domestic trend

The rupee consolidated in a narrow range and settled lower by 4 paise at 83.32 against the US dollar on Wednesday, tracking a strong American currency overseas.

Forex traders said a muted trend in domestic equities also weighed on the local unit, while a correction in oil prices provided support to the currency.

At the interbank foreign exchange market, the local unit opened at 83.31 and touched a low of 83.34 against the greenback.

It finally settled at 83.32 against the US dollar, registering a fall of 4 paise from its previous close.

On Tuesday, the rupee recovered from its all-time low to settle 10 paise higher at 83.28 against the US dollar.

 

"The rupee continued its range-bound trading, experiencing a minor positive rally to 83.25 in the first half and then trading within the range of 83.25-83.35. The hawkish tone in the November minutes of the Federal Open Market Committee (FOMC) somewhat stabilised the dollar index around 103.50.

"However, the data on inflation, which has been decreasing, suggests that there may not be further rate hikes. The rupee's range-bound movement persists due to the volatility in the dollar index, crude oil, and FII numbers, keeping it within the range of 83.10-83.40," Jateen Trivedi, VP Research Analyst at LKP Securities, said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.18 per cent higher at 103.75.

Brent crude futures, the global oil benchmark, fell 0.79 per cent to USD 81.80 per barrel.

The US dollar recovered after the minutes of the Federal Open Market Committee (FOMC) released on Tuesday showed that the monetary policy stance was slightly hawkish.

"We expect the rupee to trade with a slight positive bias towards dollar inflows due to IPOs in the domestic markets. However, a positive tone in the US dollar and expectations that crude oil prices may also surge may cap the sharp upside," Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said.

USD-INR spot price is expected to trade in a range of 83 to 83.60, Choudhary said.
 

On the domestic equity market front, Sensex rose 92.47 points or 0.14 per cent to settle at 66,023.24 points. The Nifty advanced 28.45 points or 0.14 per cent to 19,811.85 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they sold shares worth Rs 306.56 crore, according to exchange data.