Rupee Trades in Narrow Range Against US Dollar in Early Trade

In early trade on December 5, the Indian Rupee experienced a flat opening against the US Dollar, managing to rise a mere 4 paise from its all-time low, reaching 84.71. This slight increase occurred in the morning session as positive moves in domestic equities placed some support under the Rupee, but this was countered by the broader strength of the American currency observed in international markets.

Forex traders noted that the Rupee is likely to face ongoing pressure in the short term. Factors contributing to this outlook include a robust US Dollar and rising crude oil prices.

At the interbank foreign exchange market, the Rupee opened at 84.72 and traded within a narrow range, touching a low of 84.71 against the Dollar, which reflected a modest gain of 4 paise compared to its previous closing value. The day before, on Wednesday, the currency had faced a decline of 7 paise, reaching its lowest closing level of 84.75 against the US Dollar.

Market analysts like Amit Pabari from CR Forex Advisors pointed out that the upcoming Reserve Bank of India (RBI) monetary policy meeting scheduled for December 6 could be crucial. A balanced approach to managing inflation and growth during this meeting may boost market sentiment and attract new investments.

The talks at the high-level panel of the Reserve Bank commenced on Wednesday, focusing on the bi-monthly monetary policy amid expectations that there will be no changes to interest rates as retail inflation continues to exceed the upper threshold set by the central bank.

Details of the decision taken by the six-member Monetary Policy Committee (MPC), led by RBI Governor Shaktikanta Das, will be revealed on Friday, December 6.

Looking to the future, projections suggest that the US Federal Reserve might pivot towards rate cuts in 2025, which could make emerging markets such as India more attractive to investors. Additionally, improved Foreign Institutional Investor (FII) flows may alleviate liquidity issues and enable the RBI to strengthen its interventions in the forex market.

As for the Dollar index, which measures the value of the US currency against a basket of six other currencies, it traded slightly lower by 0.05 percent, standing at 106.26.

Regarding crude oil prices, Brent Crude, regarded as the global oil benchmark, increased by 0.10 percent, trading at around USD 72.38 per barrel in futures.

In domestic equity markets, the benchmark index, Sensex, rose by 49.20 points or 0.06 percent, reaching 81,005.53 points. The Nifty index also showed a similar trend, gaining 47.85 points or 0.2 percent, settled at 24,515.30 points.

On the capital markets front, Foreign Institutional Investors (FIIs) were net buyers on Wednesday, acquiring shares worth Rs 1,797.60 crore, as per the latest exchange data.

Rupee, Dollar, Equities