Currency Market: Rupee trades in narrow range against US dollar

Rupee opened on a flat note and rose just 3 paise from its all-time low level to 84.47 against the US dollar in morning trade on Friday, as the support of positive domestic equities was negated by geopolitical pressures and unabated foreign portfolio outflows.

The US dollar strengthened in the overseas market and Brent oil continued to move up as fighting between Ukraine and Russia continued to gain investors' attention.

Moreover, foreign institutional investors have continued their equities selling mode and kept the dollar well bid.

At the interbank foreign exchange, the rupee opened at 84.48 and moved in a tight range and touched 84.47 against the greenback, registering a gain of just 3 paise over its previous close.

On Thursday, the rupee depreciated 8 paise to settle at an all-time low of 84.50 against the US dollar.

"The Indian rupee made a new low on Thursday after the Reserve Bank of India (RBI) allowed it to fall as the US dollar index moved higher to 107.10 and US yields continued to remain at 4.42 per cent," Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

Bhansali further added that the rupee has depreciated 0.5 per cent in November it has managed to outperform most Asian currencies as RBI managed it with its huge reserves.

"The REER (Real Effective Exchange Rate) for October-24 rose to 107.21 from 105.34 in September -24 indicating the rupee was overvalued against a basket of 40 currencies and therefore RBI will allow it to depreciate slowly," he said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.06 per cent at 107.03.

Brent crude, the global oil benchmark, surged by 0.23 per cent to USD 74.40 per barrel in futures trade.

CR Forex Advisors MD Amit Pabari said, domestically, the rupee faced additional turbulence after the US District Court in New York indicted Adani Group Chairman Gautam Adani and several senior executives in a multi-billion-dollar bribery and fraud scandal.

The allegations, which include claims of USD 250 million (around Rs 2,100 crore) in bribes to Indian officials to secure solar energy contracts, have created a storm of negative sentiment, Pabari added.

On the domestic equity market front, Sensex was trading 296.48 points, or 0.38 per cent higher, to 77,452.27 points. The Nifty rose 95.15 points, or 0.41 per cent, to 23,445.05 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, as they offloaded shares worth Rs 5,320.68 crore, according to exchange data.