Image used for representational purpose.
| Photo Credit: Reuters

The rupee pared initial gains and settled 3 paise lower at 83.27 against the U.S. dollar on October 5, following a recovery in the American currency.

Forex traders said the rupee consolidated in a narrow range as investors preferred to stay on the sidelines ahead of the Reserve Bank of India’s rate decision.

At the interbank foreign exchange market, the rupee opened at 83.21 against the greenback and touched an intra-day low of 83.30 and a high of 83.16. It finally settled at 83.27, down 3 paise over its previous close of 83.24.

“The Indian rupee erased opening gains following recovery in the greenback but ended almost steady ahead of the U.S. weekly jobless data and the RBI’s rate decision,” said Dilip Parmar, Research Analyst, HDFC Securities.

Mr. Parmar said the rupee was well supported by lower crude oil prices, the central bank’s dollar supply and recovery in the domestic equity markets.

“Spot USDINR is expected to trade between 83.10 to 83.35 with the trend remaining sideways to bullish,” he said.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01% lower at 106.79.

Global oil benchmark Brent crude futures dipped 0.97% to $84.98 per barrel.

On the domestic equity market front, the 30-share BSE Sensex ended 405.53 points, or 0.62%t, higher at 65,631.57, while the broader NSE Nifty advanced 109.65 points, or 0.56%, to 19,545.75.

Foreign institutional investors remained net sellers in the capital market on Wednesday, offloading shares worth ₹4,424.02 crore, as per stock exchange data.

Image used for representational purpose only.
| Photo Credit: Reuters

The rupee appreciated 14 paise to settle at 83.05 (provisional) against the U.S. dollar on September 29, boosted by a firm trend in equity markets and a sharp correction in the greenback against major rivals overseas.

However, selling pressure from foreign equity investors and rising crude oil prices in international markets weighed on the domestic unit, forex traders said.

The rupee opened strong at 83.13 against the U.S. dollar and moved in the range of 83.03 to 83.13 against the greenback. It finally settled at 83.05 (provisional), registering a gain of 14 paise from its previous close.

On Thursday, the rupee settled 3 paise higher at 83.19

.Analysts said the rupee also strengthened due to a significant decline in India’s current account deficit (CAD). However, rising interest rates and U.S. bond yields prompted foreign investors to stay in selling mode.

CAD almost halved to $9.2 billion, or 1.1%, of GDP in the first quarter of the current fiscal from $17.9 billion (2.1% of GDP) a year ago, the Reserve Bank of India said on Thursday

.Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said: “Indian rupee strengthened on Friday on weak U.S. dollar index and a decline in crude oil prices. Positive tone in domestic markets also strengthened the rupee. However, FII outflows capped sharp gains.”

The dollar declined on concerns over looming U.S. government shutdown fears. Disappointing economic data from the U.S. also weighed on the greenback, he added.

“We expect the rupee to trade with a slight positive bias on as U.S. government shutdown worries may keep the dollar pressure. Recovery in global markets may also support the local currency.

“However, expectations of recovery in crude oil prices and selling pressure from foreign investors may weigh on the rupee,” Mr. Choudhary said, adding “Traders may also take cues from India’s fiscal deficit data. $/₹ spot price is expected to trade in a range of ₹82.70 to ₹83.40”

.Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, declined by 0.52% to 105.68.

Brent crude, the global oil benchmark, was trading 0.36% higher at $95.72 per barrel.

On the domestic equity front, the 30-share BSE Sensex jumped 320.09 points or 0.49% to settle at 65,828.41. The broader Nifty climbed 114.75 points or 0.59% to end at 19,638.30.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on Thursday as they offloaded shares worth ₹3,364.22 crore, according to exchange data.