The Indian rupee maintained its stability against the US dollar, settling at 83.26 (provisional) on Tuesday. The subdued performance of domestic equity markets and persistent foreign fund outflows continued to impact investor sentiments, according to forex traders.
Although the rupee remained steady, it found some support from a decline in crude oil prices amidst escalating geopolitical tensions in the Middle East, traders noted.
The interbank foreign exchange saw the rupee open at 83.26 in a range-bound trade, eventually closing at the same level against the American currency.Throughout the trading session, the rupee fluctuated between an intra-day high of 83.25 and a low of 83.27 vis-à-vis the greenback.
The previous day, the rupee had exhibited minimal movement, concluding 1 paisa lower at 83.26 against the US dollar.
In the global market, the dollar index, which measures the greenback’s strength against a basket of six currencies, experienced a slight decline, trading lower by 0.07 per cent at 106.04. Meanwhile, Brent crude futures, the global oil benchmark, saw an increase of 0.90 per cent, reaching USD 88.24 per barrel.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, stated, “We expect the rupee to trade with a slight negative bias due to geopolitical uncertainty in the Middle East, potentially leading to a safe-haven demand for the US Dollar. Additionally, month-end Dollar demand from Oil Marketing Companies (OMCs) could also put pressure on the rupee”, as per a report in The Week.
Choudhary also emphasized that the delayed ground invasion might provide support for riskier currencies at lower levels.
Market participants are anticipated to monitor India’s fiscal deficit and US CB consumer confidence data. Moreover, investor caution is expected in anticipation of the upcoming FOMC meeting later this week. The spot price of USD/INR is projected to fluctuate within the range of Rs 83 to Rs 83.60.
In the domestic equity market, the BSE Sensex closed 237.72 points or 0.47 per cent lower at 63,874.93. Similarly, the broader NSE Nifty declined by 61.30 points or 0.32 per cent, settling at 19,079.60.
Exchange data indicated that Foreign Institutional Investors (FIIs) were net sellers in the capital market on Monday, offloading shares worth Rs 1,761.86 crore.
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