Rupee trades in narrow range against US dollar in early trade

New Delhi: The rupee witnessed range-bound trading in early trade on Tuesday as firming crude oil prices and concerns about the hawkish US Fed offset the support from the overnight weakness of the American currency.

At the interbank foreign exchange, the rupee opened at 79.73 against the dollar and moved in a narrow range. It touched an early low of 79.79 in initial deals.

On Monday, the rupee rose by 12 paise to close at 79.78 against the US dollar.

Traders said the rupee opened marginally stronger on Tuesday morning, tracking the overnight weakness of the dollar. However, muted domestic equities and foreign fund outflows weighed on the local unit.

Investors will await fresh triggers this week from the US Fed event and could refrain themselves from taking large positions, said Sriram Iyer, Senior Research Analyst at Reliance Securities.

But, higher oil prices, global growth fears and a hawkish Fed could keep appreciation bias capped, Iyer noted.

Experts believe the dollar may bounce back on expectations of a hawkish US Fed and an aggressive rate hike in the Federal Open Market Committee (FOMC) meeting later this week.

On the domestic equity front, the 30-share Sensex was trading 330.79 points or 0.59 per cent lower at 55,435.43, while the broader NSE Nifty fell 100.15 points or 0.6 per cent to 16,530.85.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.10 per cent to 106.37.

Global oil benchmark Brent crude futures rose 1.31 per cent to USD 106.61 per barrel.

Foreign institutional investors remained net sellers in the capital market on Monday, offloading shares worth Rs 844.78 crore, as per exchange data.

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