Rupee rises 5 paise to 83.88 against US dollar in early trade

Mumbai: On Friday morning, the rupee traded within a tight range and gained 5 paise to reach 83.88 against the US dollar, supported by lower crude oil prices and new foreign investments. According to forex traders, the significant drop in oil prices, currently around USD 77 per barrel, is a major advantage for the rupee given India's large oil imports.

In the interbank foreign exchange market, the domestic currency opened at 83.93 and later appreciated to 83.88, marking a 5 paise increase from the previous closing rate. On Thursday, the rupee remained within a narrow range and closed 3 paise lower at 83.93 against the US dollar.

Although the dollar index recently hit a low, the Indian rupee continues to hold steady, showing minimal signs of gaining further strength. Amit Pabari, Managing Director of CR Forex Advisors, stated that the stability of the USD/INR pair within the 83.90-83.95 range is being maintained by the central bank's deliberate actions. Meanwhile, the dollar index, which measures the strength of the US dollar against six major currencies, dropped by 0.15% to 101.35 points.

In futures trading, Brent crude, the international oil benchmark, rose by 0.12% to reach USD 77.31 per barrel. Pabari also noted that in the near term, the rupee is expected to fluctuate within a narrow range, with an upper limit of 83.80 and a lower support level of 84.00.

During the morning session, the domestic stock market experienced significant volatility, with the 30-share BSE Sensex initially opening higher but later declining by 13.2 points, or 0.02%, to 81,039.99 points. The Nifty followed a similar pattern, opening higher but then slipping by 8.25 points, or 0.03%, to trade at 24,803.25 points. According to exchange data, Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday, purchasing shares worth Rs 1,371.79 crore.

Regarding the broader economy, the recent minutes from the Reserve Bank of India's Monetary Policy Committee highlighted that the gradual disinflation from 2022-23 was achieved through a 250 basis point increase in the policy repo rate starting from May 2022 and a shift in the approach towards withdrawing accommodation. Reserve Bank Governor Shaktikanta Das indicated that the current policy rate of 6.5% is broadly stable and that any justification for easing the policy at this point could be misleading.