Mumbai: The rupee paused its three-day downward move to settle flat at 83.25 against the US dollar on Friday as the support from positive domestic equities was negated by surging crude oil prices.
Forex traders said the rupee consolidated in a narrow range as selling pressure from foreign equity investors continued to weigh on the local currency.
At the interbank foreign exchange market, the local unit opened at 83.24 and traded in a narrow range of 83.22 to 83.25 before settling flat at Thursday’s closing level of 83.25 against the greenback.
According to Jateen Trivedi, VP Research Analyst at LKP Securities, the rupee’s sideways movement can be attributed to a combination of factors.
“First, RBI participation appears to be providing support to the rupee to prevent it from falling below the 83.25-83.30 range. Second, geopolitical issues are keeping the rupee from strengthening beyond 83.10,” Trivedi said, adding that the dollar index is expected to take further cues from the US Federal Reserve’s interest rate decision scheduled on November 1.
The rupee dropped 8 paise against the dollar on Thursday, the third consecutive day of fall. It had declined 4 paise on Monday, followed by a dip of 1 paisa on Wednesday. Forex markets were closed on Tuesday on account of Dussehra.
According to analysts, the dollar retreated as the US Treasury yields dropped from record levels after the US GDP data, durable goods sales orders and home sales numbers exceeded the estimated growth.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the dollar gained on robust economic data from the US.
“Dollar may strengthen on safe-haven demand on media reports that the US military struck Iranian targets in Syria.
“However, the rise in risk appetite in global markets may support the rupee at lower levels. Traders may remain cautious ahead of core PCE price index and personal income data from the US. USD-INR spot price is expected to trade in a range of Rs 82.90 to Rs 83.60,” Choudhary added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06 per cent lower at 106.54 on Friday.
Global oil price benchmark Brent crude witnessed a sharp rise of 2.39 per cent to USD 90.03 per barrel.
On the domestic equity market front, Sensex surged 634.65 points or 1.01 per cent to settle at 63,782.80. The Nifty climbed 190.00 points or 1.01 per cent to 19,047.25.
Foreign Institutional Investors sold equities worth Rs 1,500.13 crore on Friday, according to exchange data.
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