Currency update: Rupee slips 1 paisa to 83.96 against US dollar

The rupee traded in a narrow range and slipped 1 paisa to close at 83.96 against the American currency on Monday, as the support from a positive trend in equity markets was offset by a strong US dollar against major crosses overseas.

Concerns over global economic growth weighed on investor sentiments, forex traders said, adding that investors remained cautious ahead of US CPI and European Central Bank (ECB) monetary policy this week.

At the interbank foreign exchange market, the local unit opened at 83.96 against the American currency. It rose to the intra-day high of 83.86 but pared gains to finally settle at 83.96 against the US dollar, down 1 paisa from its previous close.

On Friday, the rupee gained 2 paise to close at 83.95 against the US dollar.

"The Indian rupee strengthened marginally, supported by expected intervention by the Reserve Bank of India (RBI) in the last few weeks. This was despite Asian currencies, which slipped on worries of a slowdown in the US after data released on Friday fanned slowdown worries in the US.

"Market participants noted that the Indian central bank has been 'consistently supporting' the rupee to help it hold above 84," said Maneesh Sharma, AVP - Commodities & Currencies, Anand Rathi Shares and Stock Brokers.

Globally, the focus remains on whether the Federal Reserve will deliver a 25- or 50-basis point (bp) rate cut at its policy decision next week, which may keep the dollar index tilted in favour of bears, traders said.

Meanwhile, the rupee is expected to be supported by inflows related to local IPOs this week while also keeping an eye on US consumer inflation data for August, due on Wednesday.

Meanwhile, in the domestic equity markets, Sensex climbed 375.61 points or 0.46 per cent to settle at 81,559.54 points, while Nifty rose 84.25 points or 0.34 per cent to close at 24,936.40 points.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.37 per cent to 101.54.

Brent crude, the international benchmark, rose 0.97 per cent to 71.75 in futures trade.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth Rs 620.95 crore, according to exchange data.

Meanwhile, India's forex reserves jumped by USD 2.299 billion to a new high of USD 683.987 billion for the week ended on August 30, according to the RBI data release on Friday.
In the previous reporting week, the forex reserves had jumped by USD 7.023 billion to a high of USD 681.688 billion.