Rupee rises 6 paise to 84.35 against US dollar in early trade

Rupee appreciated 6 paise to 84.35 against the US dollar in morning trade on Monday, supported by a firm trend in domestic equities.

Forex traders said factors like elevated Dollar Index levels, and a nearly 5 per cent surge in crude oil prices over the past week driven by the escalation of the Russia-Ukraine conflict pose significant headwinds for the USD/INR pair.

At the interbank foreign exchange, the rupee opened at 84.38 and moved in a tight range and touched 84.35 against the greenback, registering a gain of 6 paise over its previous close.

On Friday, the rupee recovered from its all-time low level and appreciated 9 paise to close at 84.41 against the US dollar.

The Indian rupee opened with some gains as FPIs selling came down considerably and markets rose last Friday, Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

"RBI has also warned banks from taking long side positions in the USDINR pair for speculation purposes," Bhansali added. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.58 per cent at 106.93.

Brent crude, the global oil benchmark, fell by 0.21 per cent to $75.01 per barrel in futures trade. The overall strength of the American currency and elevated crude oil prices are likely to strain India's trade balance, creating challenges for sustained rupee appreciation, forex traders said.

"Thus the USDINR pair is anticipated to trade within a defined range in the medium term, with support at 83.80 and resistance around 84.50. The overall bias, however, tilts toward the downside," according to CR Forex Advisors MD Amit Pabari.

Following the win by the incumbent government in Maharashtra, the domestic equity markets, which surged nearly 2 per cent on Friday, opened on a positive note in Morning session on Monday.

The 30-share equity benchmark Sensex jumped 1,289.89 points to 80,407 in early trade, while Nifty jumped 405.25 points to 24,312.50. Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Friday, as they offloaded shares worth Rs 1,278.37 crore, according to exchange data.