New Delhi: The rupee traded in a narrow range and edged up 10 paise to 96.65 against US dollar in early trade on Thursday on likely intervention by the Reserve Bank of India.
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Forex traders said rupee is under pressure amid persistent macroeconomic headwinds, including global dollar strength (DXY trading near multi-month highs), elevated Brent crude prices hovering near USD 102 per barrel.
Moreover, relentless foreign fund outflows as well as fall in forex reserves by USD 50 billion in just three weeks from the high of USD 786 billion in September dented investor sentiments further.
At the interbank foreign exchange market, the rupee opened at 96.71, then gained some ground to touch 96.65, registering a rise of 10 paise over its previous close.
On Wednesday, the rupee closed at 96.75 against the American currency.
"Strong corporate importer demand for dollars together with safe-haven capital shifts overpowered the RBI's hawkish policy stance, driving USD/INR higher through the afternoon until routine state-run bank interventions helped stem further losses," said Anil Kumar Bhansali Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Forex traders said investors will wait for RBI to take action against speculation on the USD/INR pair with the Governor assuring to help in finding rupee to its true value which is undervalued presently.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 102.25, higher by 0.01 percent.
Brent crude, the global oil benchmark, was trading higher by 2.17 per secent at USD 102.37 per barrel in futures trade amid concerns over disruptions to crude supplies through the Strait of Hormuz.
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"The main reason for the rebound in crude oil prices is persistent concern over Middle East supply and shipping disruptions, particularly with attacks on tankers in the Gulf and around the Strait of Hormuz intensifying," Bhansali said.
Sensex declined 264.97 points to 72,408.15 in early trade, while Nifty fell 87.50 points to 22,507.65.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 6,121.37 crore on a net basis on Wednesday, according to exchange data.
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