Rupee vs Dollar: Domestic currency falls 1 paisa to close at 83.04 against dollar

Currency market Update: The rupee settled on a flat note with a loss of just 1 paisa at 83.04 (provisional) against the dollar on Thursday on the back of strengthening American currency and sharp rise in crude oil prices. The domestic currency broke its six-day gaining streak despite positive equity market sentiment, as foreign funds outflow dented sentiments.

At the interbank foreign exchange market, the local unit opened at 83.05 and traded between the peak of 82.93 and the lowest level of 83.08 against the greenback during the intra-day deals.

It finally settled at 83.04 (provisional) against the dollar, down by just 1 paisa over its previous closing level.

"The Indian rupee is trading flat. It opened on a positive note on weak Dollar and positive domestic markets. However, it lost its initial gains on some FII outflows and a slight recovery in crude oil prices. The US dollar declined on Wednesday as traders trimmed their positions ahead of inflation data," Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.

Investors are awaiting US inflation data to be released later in the day for further cues, forex analysts said, adding that traders will also closely monitor the domestic inflation numbers to be released on Friday.

"We expect the rupee to trade with a slight positive bias on the soft US Dollar and positive Asian currencies. However, recent FII outflows and recovery in crude oil prices may cap sharp gains.

"Concerns over global economic slowdown and the ongoing geopolitical tensions in the Red Sea and Middle East may also weigh on Rupee. Investors may remain cautious ahead of inflation data US and CPI and IIP data from and India on Friday. USDINR spot price is expected to trade in a range of Rs 82.70 to Rs 83.30," Choudhary said.

The domestic currency had gained 10 paise on Wednesday. The rupee has witnessed a cumulative gain of 29 paise in the previous six sessions since the level of 83.32 versus dollar recorded on January 2.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent higher at 102.14 on Thursday.

Brent crude futures, the global oil benchmark, surged 1.67 per cent to USD 78.08 per barrel.

On the domestic equity market front, Sensex rose 63.47 points, or 0.09 per cent, to settle at 71,721.18 points. The Nifty advanced 28.50 points, or 0.13 per cent, to 21,647.20 points.

Foreign institutional investors (FIIs) sold shares worth Rs 1,721.35 crore on Wednesday, according to exchange data.