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The rupee appreciated by 3 paise to 83.10 against the U.S. dollar on May 28, tracking a positive trend in domestic equities and weakness of the American currency in the overseas market.
Forex traders rupee is likely to trade with a positive bias tracking a positive trend in domestic equities and expectations of fresh foreign inflows, however, a recovery in crude oil prices may cap a sharp upside.
At the interbank foreign exchange market, the local unit opened at 83.14 and gained further ground to trade at 83.10 against the greenback, registering a gain of 3 paise from its previous closing level.
On Monday, the rupee pared its initial gains and settled for the day lower by 3 paise at 83.13 against the U.S. dollar.
The opening for the rupee on Tuesday was flattish and the $/₹ pair should move within a narrow range of 83.00 to 83.20, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
Importers need to keep buying in dips, as the Reserve Bank of India (RBI) may possibly not allow a big move downside for the pair, Mr. Bhansali added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 104.42, lower by 0.12%.
Brent crude futures, the global oil benchmark, advanced 0.24% to $83.30 per barrel.
Going ahead, “the performance of Indian equities is expected to be a significant driver for the rupee, especially as investors position themselves ahead of the Lok Sabha election results scheduled for June 4,” said CR Forex Advisors MD Amit Pabari.
Given these factors, the rupee is expected to appreciate to around 82.80–82.50 in the near term, with medium-term projections ranging between 82.20 and 82.00, Mr. Pabari added.
On the domestic equity market, the 30-share BSE Sensex was trading 124.2 points, or 0.16% higher at 75,514.70 points. The broader NSE Nifty rose 47.95 points or 0.21% to 22,980.40 points in initial trade.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth ₹541.22 crore, according to exchange data.
