Rupee trades in narrow range against US dollar in early trade

Rupee depreciates against dollar due to foreign fund outflows, strong dollar, and weak equities, but RBI intervention expected.

The rupee witnessed range-bound trade and depreciated 3 paise to 84.07 against the U.S. dollar in initial deals on Wednesday (October 16, 2024), weighed down by significant foreign fund outflows and the strength of the American currency in the overseas market.

Forex traders said the rupee is likely to trade in a narrow range during the day as strong dollar and a muted tone in the domestic equities weighed on the local unit, while weak crude oil prices and any intervention by the Reserve Bank of India (RBI) may also support the local currency at lower levels.

At the interbank foreign exchange, the rupee opened at 84.03 against the greenback. In the initial trade, it touched 84.07, registering a fall of 3 paise over its previous close.

On Tuesday (October 15, 2024), the rupee witnessed a range-bound trade and appreciated 1 paisa to 84.04 against the U.S. dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06% lower at 103.19.

According to traders, the rupee remains under intense pressure, mainly due to Foreign Institutional Investors (FIIs) offloading approximately $8 billion in October.

"The sell-off stems from profit-booking by FIIs, as Indian equities, after months of inflows totalling $25 billion, are now seen as overvalued. Adding to the pressure is the strengthening dollar index, which has surged to a two-month high of 103.25," CR Forex Advisors MD Amit Pabari said.