A customer holds a hundred rupees Indian currency notes near a roadside currency exchange stall in New Delhi.
| Photo Credit: REUTERS

The Indian rupee traded in a tight range appreciated 3 paise to 83.94 against the U.S. dollar in early trade on Tuesday (August 13, 2024) on positive domestic macroeconomic data.

However, a muted trend in domestic equities and foreign fund outflows capped the gains for the local unit.

At the interbank foreign exchange, the rupee opened at 83.95 against the greenback and traded in a tight range. In initial trade it touched 83.94, registering a gain of 3 paise over its previous close.

On Monday (August 12, 2024), the rupee settled for the day lower by 2 paise at 83.97 against the American currency.

Forex traders said market participants are treading cautiously amid a landscape fraught with geopolitical uncertainties and a consolidating U.S. Dollar.

However, the Indian rupee is trading in a narrow range and the stability is underpinned by several factors: a narrowing fiscal deficit, stable oil prices, stronger economic growth and the RBI’s substantial reserves of $675 billion, ready to be deployed if needed, CR Forex Advisors MD Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02% lower at 103.11.

Brent crude, the global oil benchmark, declined 0.74% to $81.69 per barrel.

Traders are awaiting data from the U.S. including the U.S. CPI data to gauge the FED outlook on interest rates, said Anil Kumar Bhansali, Head of Treasury and Executive DirectorFinrex Treasury Advisors LLP.

On the domestic macroeconomic front, India’s direct tax mop-up rose by 22.5% over last year. India’s IIP stood at 4.2% for June-24.

The retail inflation eased to 3.54% with food prices falling after a good monsoon. It was the lowest in the last five years and has dipped below RBIs targetted rate of 4%.

On the domestic equity market front, Sensex declined 100.17 points, or 0.13%, to 79,548.75 points. The Nifty fell 19.60 points, or 0.08%, to 24,327.40 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth ₹4,680.51 crore, according to exchange data.

Image for representational purposes only.
| Photo Credit: REUTERS

The rupee was trading in a narrow range against the U.S. dollar in early trade on May 10, as the support from positive domestic equities was negated by elevated crude oil prices.

Forex traders said the strength of the American currency in the overseas market and significant foreign fund outflows dented investors’ sentiments.

At the interbank foreign exchange market, the local unit opened at 83.48, it touched 83.46 in the initial trade, registering a gain of 2 paise from its previous close.

On May 9, the rupee closed at 83.48 against the American currency.

“The Indian Rupee was again sold-off on May 9 as FPIs outflows continued to trigger demand for the U.S. dollar, while probable RBI selling at 83.50 did not allow a higher up move on the USD/INR pair. On May 10 also the same is expected from the USD/INR pair with RBI continuing its control at 83.50,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was at 105.30, higher by 0.07%.

Brent crude futures, the global oil benchmark, rose 0.5% to $84.34 per barrel.

On the domestic equity market, the 30-share BSE Sensex was trading 169.82 points, or 0.23% higher at 72,573.99 points. The broader NSE Nifty was up 67.05 points, or 0.31%, to 22,024.55 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on May 9 as they offloaded shares worth ₹6,994.86 crore, according to exchange data.

“FPIs offloaded ₹22,858 crore in six market sessions in May 2024, while DIIs (Domestic Institutional Investors) were buyers to the tune of ₹16,700 crore. Uncertainty in election results and higher U.S. treasury yields were the main causes of this sell-off,” Mr. Bhansali added.