The rupee stayed flat at 82.90 against the US dollar in early trade on Wednesday, March 6, 2024, resisting downward pressure from a stronger American currency and volatile crude oil prices in the overseas markets.
The local unit was also dragged down by the negative sentiment in the equity markets, however, it found support due to some fresh inflow of foreign funds, forex traders said.
At the interbank foreign exchange, the domestic currency opened at the previous day’s closing level of 82.90 and oscillated between 82.89 and 82.91 against the greenback.
On Tuesday, the rupee settled flat at 82.90 against the US dollar.
Gaurang Somaiya, forex and bullion analyst, Motilal Oswal Financial Services, said the rupee traded in a narrow range and volatility remained low despite weakness in the dollar against its major crosses.
The restricted movement in the Indian currency was attributed to the services PMI (Purchasing Managers’ Index) data in the US, which showed the sector’s growth in February fell short of expectations.
Also, India’s services PMI data on Tuesday came in weaker than market expectations and indicated a slowdown in the services sector in February. “Some gains were seen in the rupee after the announcement that Bloomberg Index Services will include 34 Indian government bonds in its emerging market local currency indexes from January 2025, which may prove to be beneficial for the currency and could further boost debt inflows,” Somaiya said, adding, “we expect USD-INR (Spot) to trade sideways and quote in the range of 82.80-83.05.” Upcoming non-farm payrolls data in the US and Federal Reserve Chairman Jerome Powell’s testimony before lawmakers are expected to provide further cues to market participants.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose marginally by 0.01 per cent to 103.76.
Brent crude futures, the global oil benchmark, rose 0.13 per cent to USD 82.15 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 127.06 points or 0.17 per cent lower at 73,550.07 points. The broader NSE Nifty declined 40.60 points or 0.18 per cent to 22,315.70 points.
Foreign institutional investors (FIIs) were net buyers in the capital markets on Tuesday as they bought shares worth ₹574.28 crore, according to exchange data.
