Rupee trades in narrow range against US dollar in early trade

"The Indian rupee faced pressure due to an advancing dollar index, driven by hawkish remarks from Federal Reserve officials, according to forex traders."

Mumbai: The rupee witnessed a range-bound trading against the US dollar in early trade on Thursday, weighed down by a negative trend in domestic equities and a strong American currency.

Forex traders said the Indian rupee was weighed down by a rising dollar index, following hawkish comments from Federal Reserve officials.

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At the interbank foreign exchange, the rupee opened at 83.16 against the dollar, registering a fall of 5 paise over its previous close. The domestic unit also touched 83.08 against the American currency in initial trade.

On Wednesday, the rupee staged a sharp rebound from its lifetime low levels and surged by 21 paise to close at 83.11 against the US dollar.

“After a hawkish FED, not ruling out one hike in 2023 due to sticky inflation and keeping interest rates fall in 2024 by a smaller than expected margin, the comments boded poorly for Asian markets given that it tightens monetary conditions and limits flow of foreign capital in the region,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

The FOMC also stressed that the long-term projections are inherently uncertain and subject to change as the financial atmosphere is highly dynamic and contains numerous potential risks that could influence future outcomes, Bhansali said.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.21 per cent to 105.55.

Brent crude futures, the global oil benchmark, declined 0.66 per cent to USD 92.91 per barrel.

In the domestic equity market, the 30-share BSE Sensex declined 306.96 points or 0.46 per cent to 66,493.88. The broader NSE Nifty fell 82.95 points or 0.42 per cent to 19,818.45.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 3,110.69 crore, according to exchange data.