Rupee trades in narrow range against US dollar in early trade

On 05 Dec 2024 10:06:26

Rupee opened on a flat note and rose just 4 paise from its all-time low level to 84.71 against the US dollar in morning trade on Thursday,

Rupee opened on a flat note and rose just 4 paise from its all-time low level to 84.71 against the US dollar in morning trade on Thursday, as the support from positive domestic equities was negated by the broad strength of the American currency in the overseas market.

Forex traders said rupee is likely to remain under pressure in the near-term amid strong dollar and elevated in crude oil prices.

At the interbank foreign exchange, the rupee opened at 84.72 and moved in a tight range and touched 84.71 against the greenback, registering a gain of just 4 paise over its previous close.

On Wednesday, the rupee slumped by 7 paise to hits its lowest-ever closing level of 84.75 against the US dollar.

"The upcoming RBI monetary policy meeting on December 6 will be pivotal, as a balanced stance on inflation and growth could further enhance sentiment and attract fresh inflows," CR Forex Advisors' Amit Pabari said.

The Reserve Bank's high-level panel on Wednesday started deliberations on the bi-monthly monetary policy amid expectations of status quo on interest rate as the retail inflation is above the upper tolerance level of the central bank.

The decision taken by the RBI Governor Shaktikanāta Das headed six-member Monetary Policy Committee (MPC) will be announced on Friday (December 6).

Looking ahead, the US Fed's anticipated pivot towards rate cuts in 2025 could further improve the appeal of emerging markets like India. Moreover, this, combined with stabilizing FII flows, could ease liquidity constraints and enable the RBI to step up its forex market interventions, Pabari added.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.05 per cent at 106.26.

Brent crude, the global oil benchmark, rose by 0.10 per cent to USD 72.38 per barrel in futures trade.

On the domestic equity market front, the 30-share benchmark index Sensex was trading 49.20 points, or 0.06 per cent higher, to 81,005.53 points. The Nifty rose 47.85 points, or 0.2 per cent, to 24,515.30 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, as they purchased shares worth Rs 1,797.60 crore, according to exchange data.