Currency Update: Rupee settles flat at 83.99 against US dollar

The rupee pared its initial gains and settled on a flat note at 83.99 against the US dollar on Monday on selling pressure from foreign funds and weak tone in the domestic markets.

Forex traders said elevated crude oil prices and escalating tensions between Israel and Iran weighed on the local unit, while all-time high forex reserves boosted investor sentiments.

At the interbank foreign exchange, the rupee opened at 83.96 against the US dollar and touched an intra-day high of 83.95 and a low of 83.99.

The domestic currency finally ended the day at 83.99 (provisional), unchanged from its previous closing level.

"We expect the rupee to trade with a negative bias on selling pressure from foreign funds and weak tone in the domestic markets. Escalating tensions between Israel and Iran may further pressurise the rupee," said Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas.

Choudhary said traders may take cues from comments by US Fed officials.

"Investors may remain cautious ahead of the RBI's monetary policy meeting outcome on Wednesday," he said, adding that USDINR spot price is expected to trade in a range of Rs 83.80-84.20.
Meanwhile, India's forex reserves jumped USD 12.588 billion to a new all-time high of USD 704.885 billion for the week ended September 27, the Reserve Bank of India (RBI) said on Friday.

On the domestic equity market front, the Sensex fell 638.45 points, or 0.78 per cent, to close at 81,050.00. The Nifty declined 218.85 points, or 0.87 per cent to settle at 24,795.75. Both indices suffered losses in the previous week.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was up 0.07 per cent to 102.59.

Brent crude, the international benchmark, advanced 2.09 per cent to USD 79.68 in futures trade.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, offloading shares worth Rs 9,896.95 crore on a net basis in the cash segment, according to exchange data.