Rupee trades in narrow range against US dollar in early trade

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The rupee witnessed a range-bound trading against the US dollar in early trade on Thursday, September 21, 2023 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.

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.