Rupee rises 5 paise to 83.87 against U.S. dollar in early trade

Forex traders await U.S. Fed policy, rupee steady, forex reserves at all-time high, Sensex and Nifty rise.

The rupee appreciated by 5 paise to 83.87 against the U.S. dollar in early trade on Monday supported by weakening of the American currency in the overseas market and significant foreign fund inflows.

Forex traders said market participants are eagerly awaiting cues from the U.S. Fed policy on Wednesday, with a rate cut all but certain. However, the magnitude of the cut remains uncertain.

Moreover, the rupee continues to hold steady within a well-defined range on active intervention by the Reserve Bank of India (RBI), they added.

At the interbank foreign exchange market, the local unit opened at 83.89, then inched further to touch 83.87, registering a rise of 5 paise from its previous close.

On Friday, the local unit settled higher by 4 paise at 83.92 against the U.S. dollar.

"Despite a significant drop in the dollar index and crude oil prices remaining under control in recent sessions, alongside inflation figures staying below the Central Bank's 4% target for the second consecutive month, the rupee has held steady," CR Forex Advisors MD Amit Pabari said.

Pabari further added that this stability is largely due to the RBI's persistent intervention on the buying side, reflected in the build-up of reserves, which have now reached an all-time high of around $690 billion.