Currency Market Update: Rupee rises by 3 paise to settle at 83.58 vs dollar

Rupee consolidated in a narrow range and settled for the day 3 paise higher at 83.58 against the US dollar on Tuesday, on firm domestic markets and sustained inflow of foreign capital.

Forex traders said a decline in crude oil prices favoured the rupee, while a strong US dollar capped sharp gains.

At the interbank foreign exchange market, the local unit opened at 83.59, and touched an intraday high of 83.56 and a low of 83.60 against the dollar during the trading session.

It finally settled at 83.58 against the American currency, registering a gain of 3 paise from its previous close.

On Monday, the rupee depreciated 10 paise to 83.61 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading marginally higher by 0.11 per cent at 104.29.

"The US dollar gained on positive US markets and a surge in US treasury yields on rising expectations that Donald Trump may be re-elected as the President of the United States in the upcoming elections in November," said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

Brent crude futures, the global oil benchmark, were trading 0.68 per cent lower at USD 84.27 per barrel.

"We expect the rupee to trade with a slight negative bias on the strong US dollar and weak Asian currencies. However, a decline in crude oil prices and continued foreign inflows may support the rupee at lower levels," Choudhary said, adding that any intervention by the RBI may also support the local unit.

In the domestic equity market, the 30-share BSE Sensex ended the day 51.69 points, or 0.06 per cent, higher at 80,716.55 points. The broader NSE Nifty settled 26.30 points, or 0.11 per cent, higher at 24,613.00 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 1,271.45 crore, according to exchange data.

Meanwhile, India's merchandise exports in June increased 2.56 per cent to USD 35.2 billion despite global challenges, even as the trade deficit widened to USD 20.98 billion during the month.

On the price front, wholesale inflation in the country surged to a 16-month high of 3.36 per cent in June on account of a rise in prices of food articles, especially vegetables and manufactured items.