File. | Photo source: Reuters
The rupee pared initial gains and settled lower on the fifth day at 83.18 (provisional) paise against the US dollar on May 28 amid a negative trend in domestic equities and lower dollar demand from importers.
Forex traders said the rupee strengthened in a tight range as elevated crude oil prices weighed on investor sentiment while the decline in the US dollar alleviated the negative situation.
In the interbank foreign exchange market, the local unit recorded transactions in a narrow range. It opened at 83.14 and hit an intraday high of 83.10 and a low of 83.19.
The domestic unit finally settled at 83.18 (provisional), down 5 paise from the previous close.
On Monday, the rupee pared initial gains and settled 3 paise lower for the day at 83.13 against the US dollar.
“We expect the rupee to trade with a slight positive bias as strength in domestic markets and expectations of fresh foreign inflows may support the rupee,” said Anuj Choudhary, research analyst at Sharekhan by BNP Paribas.
A weakening US dollar could also support the local unit. However, the rise in oil prices may stop the rapid rise in prices.
“Investors may remain cautious as they await data on the core PCE price index later this week. USDINR spot price is expected to trade in the range of Rs 82.90 to Rs 83.50,” Choudhary added.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading at 104.47, or 0.12% lower, as investors reduced positions ahead of the inflation data.
Brent crude futures, the global crude oil benchmark, rose 0.18% to $83.25 a barrel.
On the domestic equity market, the 30-share BSE Sensex fell 220.05 points or 0.29% to close at 75,170.45 points. The broader NSE Nifty index fell 44.30 points or 0.19% to close at 22,888.15 points.
Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday, selling shares worth ₹ 541.22 crore, according to stock exchange data.
