Rupee inches higher to settle at 83.41 vs US dollar

Currency Market Update: The rupee recovered 4 paise to 83.41 (provisional) against the US dollar on Monday, tracking foreign capital inflows and a strengthening greenback against major crosses overseal. According to forex analysts, the domestic currency initially faced resistance from a strong greenback and upward momentum in the crude oil prices but recovered the lost ground during the session on the back of a sharp rally in equities in the late afternoon trade.

At the interbank foreign exchange market, the local unit opened at 83.46 and traded between 83.41 and 83.52 against the greenback during the session.

The domestic currency finally settled at 83.41 (provisional) against the dollar, registering a gain of 4 paise from its previous closing level.

The rupee had settled 7 paise lower at 83.45 against the US dollar on Monday after losing 10 paise in the preceding session on Friday.

Jateen Trivedi, VP Research Analyst -- Commodity and Currency, LKP Securities, said: "Volatility in the capital market kept the rupee range-bound. Participants are closely monitoring the upcoming interest rate decision in the US for potential price action in the rupee. Weakness persists in the rupee, albeit in a stable manner".

Analysts also said that investors moved cautiously ahead of the US Federal Reserve's interest rate decision and upcoming macroeconomic data from the US and the domestic manufacturing growth numbers.

The Federal Open Market Committee (FOMC) meeting begins on Tuesday and the interest rate decision is expected to be announced on Wednesday.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.13 per cent to 105.58.

Brent crude futures, the global oil benchmark, rose 0.15 per cent to USD 88.53 per barrel.

On the domestic equity market front, Sensex declined 188.50 points, or 0.25 per cent, to settle at 74,482.78, and Nifty fell 38.55 points, or 0.17 per cent, to close at 22,604.85.

Foreign institutional investors (FIIs) were net buyers in the capital markets on Monday, as they purchased shares worth Rs 169.09 crore on a net basis, according to exchange data.