Rupee rises 5 paise to 83.87 against US dollar on weakening USD

Forex traders noted that market participants are awaiting the US Fed's policy announcement on Wednesday, where a rate cut is expected, though its size remains uncertain. They also mentioned that the rupee remains stable within a defined range due to active intervention by the Reserve Bank of India (RBI).

Mumbai: The rupee appreciated by 5 paise to 83.87 against the US dollar in early trade on Monday supported by weakening of the American currency in the overseas market and significant foreign fund inflows.

Forex traders said market participants are eagerly awaiting cues from the US Fed policy on Wednesday, with a rate cut all but certain. However, the magnitude of the cut remains uncertain.

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Moreover, the rupee continues to hold steady within a well-defined range on active intervention by the Reserve Bank of India (RBI), they added.

At the interbank foreign exchange market, the local unit opened at 83.89, then inched further to touch 83.87, registering a rise of 5 paise from its previous close.

On Friday, the local unit settled higher by 4 paise at 83.92 against the US dollar.

“Despite a significant drop in the dollar index and crude oil prices remaining under control in recent sessions, alongside inflation figures staying below the Central Bank’s 4 per cent target for the second consecutive month, the rupee has held steady,” CR Forex Advisors MD Amit Pabari said.

Pabari further added that this stability is largely due to the RBI’s persistent intervention on the buying side, reflected in the build-up of reserves, which have now reached an all-time high of around USD 690 billion.

India’s forex reserves jumped USD 5.248 billion to a new all-time high of USD 689.235 billion for the week ended September 6, the Reserve Bank of India said on Friday.

The overall kitty had jumped by USD 2.299 billion to a record USD 683.987 billion for the previous reporting week.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.26 per cent to 100.85 points.

Brent crude, the international benchmark, gained 0.15 per cent to USD 71.72 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex advanced 128.95 points, or 0.16 per cent, to 83,019.89 points, while the Nifty was up 46.00 points, or 0.18 per cent, to 25,402.50 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday, as they purchased shares worth Rs 2,364.82 crore, according to exchange data.