The rupee traded in a narrow range against the US dollar in early trade on Monday, as the support from positive domestic equities was negated by elevated crude oil prices and foreign fund outflows.
Forex traders said significant dollar demand by importers has exerted persistent downward pressure on the local currency.
Moreover, investors are adopting a cautious stance amid ongoing trade tensions with the US, with expectations of a settlement towards the end of the year.
At the interbank foreign exchange market, the rupee opened at 89.45. It slipped further to trade at 89.46 against the greenback in initial deals, registering a loss of 1 paisa from its previous closing level.
On Friday, the rupee dropped nine paise to settle at 89.45 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was 0.02 per cent lower at 99.44.
Brent crude, the global oil benchmark, rose 1.57 per cent to USD 63.35 per barrel in futures trade.
“In the near term, USD/INR will likely move within the 88.90–89.80 range, with 88.80–89.00 acting as a strong support area,” CR Forex Advisors MD Amit Pabari said.
If India–US trade ties improve even slightly, the rupee could move toward the stronger side of this band. A clear break below 88.80 would be the first sign that the rupee may start strengthening more steadily, Pabari added.
On the domestic equity market front, Sensex and Nifty hit fresh lifetime highs in early trade. The Sensex was trading 315.87 points or 0.37 per cent higher at 86,022.54, while Nifty went up 82.55 points or 0.32 per cent to 26,287.20.
Foreign institutional investors sold equities worth Rs 3,795.72 crore on a net basis on Friday, according to exchange data.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
