Mumbai, May 27 (PTI) The rupee pared its initial gains and settled for the day lower by 3 paise at 83.13 against the US dollar on Monday, mirroring the benchmark indices that erased their gains and ended the day off their record-high levels.
Forex traders said the rupee settled in a narrow range as the weakness of the American currency in the overseas market supported the rupee, while elevated crude oil prices in the international market restricted the upmove.
At the interbank foreign exchange, the local unit opened at 83.08, then touched an intra-day high of 83.05 but soon pared the gains and settled for the day lower by 3 paise at 83.13 against the American currency.
On Friday, the rupee rallied for the fourth consecutive trading session and settled with a sharp gain of 19 paise at 83.10 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 104.67, lower by 0.05 per cent.
Brent crude futures, the global oil benchmark, advanced 0.47 per cent to USD 82.51 per barrel.
“We expect the rupee to trade with a positive bias on positive domestic equities and expectations of fresh foreign inflows. However, a strong US dollar and a recovery in crude oil prices may cap sharp upside,” Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas said.
US markets will remain closed on Monday on Memorial Day holiday. Investors may remain cautious ahead of core PCE (personal consumption expenditures) price index data later this week. USD-INR spot price is expected to trade in a range of Rs 82.80 to Rs 83.30, Choudhary added.
Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said: “Front running on flows from MSCI index continued to hold rupee on the upside but as equities fell rupee closed lower.
“It is expected to be in the range of 82.95 to 83.25 on Tuesday with oil and possibly RBI sitting on the upside and exporters selling on the downside.” On the domestic macroeconomic front, India’s forex reserves jumped USD 4.549 billion to a new all-time high of USD 648.7 billion for the week ended May 17, the Reserve Bank said on Friday.
This is the third consecutive week of increase in the overall kitty, which had increased by USD 2.561 billion to USD 644.151 billion in the previous reporting week ended May 17.
On the domestic equity market, the 30-share BSE Sensex declined 19.89 points, or 0.03 per cent, to close at 75,390.50 points. The broader NSE Nifty settled 24.65 points or 0.11 per cent lower at 22,932.45 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth Rs 541.22 crore, according to exchange data. PTI DRR HVA
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