Rupee trades in narrow range against US dollar in morning trade

Rupee trades in narrow range against US dollar in morning trade

The rupee rebounded from its all-time low levels and appreciated 5 paise to 84.05 against the US dollar in morning trade on Monday, weighed down by elevated crude oil prices and strong dollar as risk-off sentiment gripped the markets.

Forex traders said there has been significant foreign fund outflows and crude oil prices have surged by nearly 10 per cent, fueled by Hurricane Milton’s impact on US production along with the tensions in the Middle East between Israel and Iran.

However, the Reserve Bank of India's intervention, backed by record-high reserves has supported the local unit at lower levels.

At the interbank foreign exchange, the rupee opened at 84.06 against the greenback and traded in a tight range. In initial trade it touched 84.05, registering a rise of 5 paisa over its previous close.

On Friday, the rupee on Friday fell 12 paise to a record low of 84.10 against the US dollar.

"Indian equities saw substantial outflows, with FIIs offloading nearly USD 6.4 billion in October, as risk-off sentiment gripped the markets. Adding to the strain, crude oil prices have surged by nearly 10 per cent," CR Forex Advisors MD-Amit Pabari said.

Pabari further added that the Reserve Bank of India's intervention, backed by record-high reserves, and strong resistance at the 84.10 level could trigger a pullback below 84 as FII outflows begin to ease.

"Thus in short term we expect the USDINR pair to trade in a range of 83.90 to 84.10," he said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.13 per cent higher at 103.02.

Brent crude, the global oil benchmark, declined 1.21 per cent to USD 78.08 per barrel.

On the domestic equity market front, Sensex advanced 461.97 points, or 0.57 per cent, to 81,843.33 points. The Nifty rose 140.40 points, or 0.56 per cent, to 25,104.65 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Friday as they offloaded shares worth Rs 4,162.66 crore, according to exchange data.

Meanwhile, India's forex reserves dropped by USD 3.709 billion to USD 701.176 billion for the week ended October 4, the RBI said on Friday.

In the previous reporting week, the reserves had jumped by USD 12.588 billion to an all-time high of USD 704.885 billion.