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Rupee Strengthens Slightly Against US Dollar at 83.99 Amid Early Trade

Submitted by admin on October 17th, 2024

Indian rupee traded range-bound and edged up 3 paise to 83.99 against the US dollar in early trades on Thursday due to suspected intervention from the Reserve Bank of India (RBI), as well as the decline in the price of oil, that supported the local currency.

Forex traders are expecting the rupee to move within a tight range for most of the day. A strong dollar and a weak local equity market is likely to pull the rupee down, while softening of crude oil prices and likely RBI intervention may help the currency.

On the interbank foreign exchange market, the currency initially opened at 84.01 against the greenback on Wednesday, but briefly rose to 83.99, whereby it showed a gain of three paise compared with the previous close. At 20:35 IST on Wednesday, the currency showed limited movement and rose two paise to 84.02 against the dollar.

The dollar index is standing at 103.59, which follows a basket of six currencies. As of now, Brent crude oil prices have improved marginally by 0.26 percent and at USD 74.41 per barrel in futures.

It is pointed out by Amit Pabari, managing director at CR Forex Advisors that the country’s trade deficit has narrowed sharply to $20.78 billion in September from a ten-month high $29.65 billion in August. The easing in the trade gap partially removes some of the pressure from the rupee, which momentarily gives it relief.

Pabari also said recent drops in crude oil prices, down 5 percent due to diminishing global demand and easing tensions in the Middle East, also give a rationale for expecting a strong rupee.

Market analysts are eagerly following the next European Central Bank (ECB) monetary policy and key US economic releases that may serve as additional factors affecting the rupee’s future course.

The equity market front was not so favorably, as the Sensex shed 281.66 points, or 0.35 percent, to 81,219.70 points, and Nifty lost 129.35 points, or 0.52 percent, to 24,841.95 points. Foreign institutional investors (FIIs) had sold 3,435.94 crore worth of shares on Wednesday, per the exchange data.

The macroeconomic developments edged the merchandise exports of India up by 0.5 percent at USD 34.58 billion in September. At the same time, the trade deficit shrank to a five-month low to USD 20.78 billion. Official data said that imports have risen 1.6 percent from USD 54.49 billion last year to USD 55.36 billion in the same period.