The rupee witnessed range-bound trading against the US dollar in early trade on Friday, as the support from positive domestic equities was negated by elevated crude oil prices and strong American currency. Forex traders said the dollar strengthened post the release of the US inflation number that was reported higher-than-expectation and weighed on the domestic unit.
However, a bullish trend in domestic equities, wherein both benchmark indices touching all-time high levels, supported the rupee at lower levels.
At the interbank foreign exchange, the rupee was trading in a narrow range. It opened at 83.02 against the dollar. It touched a low of 83.07 against the American currency in initial trade, down 4 paise from its previous close. On Thursday, the rupee closed 2 paise lower at 83.03 against the US dollar.
Forex traders said the rupee is likely to trade with a slight negative bias on expectations that the US dollar may rise further. Moreover, elevated crude oil prices and selling pressure from foreign investors may put further pressure on the rupee. However, any intervention by the Reserve Bank of India and positive domestic markets may support the rupee at lower levels, they said.
Meanwhile, the dollar index fell by 0.15 per cent to 105.28. Brent crude futures, the global oil benchmark, was trading 0.95 per cent higher at USD 94.59 per barrel. According to Gaurang Somaiya, forex and bullion analyst at Motilal Oswal Financial Services, the focus will be on consumer sentiment and Empire State manufacturing index number from the US.
“We expect the USDINR (Spot) to trade sideways and quote in the range of 82.80 and 83.20,” Somaiya said. In the domestic equity market, the BSE Sensex advanced 102.84 points or 0.15 per cent to 67,621.84. The NSE Nifty was up 30.25 points or 0.15 per cent to 20,133.35. According to exchange data, Foreign Institutional Investors (FIIs) were net buyers in the capital market on Thursday as they purchased shares worth Rs 294.69 crore.
