Rupee trades in narrow range against U.S. dollar in early trade

Indian rupee falls to 83.90 against the U.S. dollar due to trade deficit, dollar demand, and Fed rate cut expectations.

Rupee traded in a narrow range in morning trade on Thursday (August 23, 2024), as the support from positive domestic equities was negated by relentless dollar demand from importers.

At the interbank foreign exchange market, the local unit opened at 83.93 and fell to 83.95, registering a loss of 5 paise from its previous close.

On Wednesday, the Indian rupee fell 13 paise to 83.90 against the U.S. dollar.

"The rupee's ongoing decline has been fuelled by a growing trade deficit and relentless dollar demand from importers, placing it under significant pressure," CR Forex Advisors MD Amit Pabari said.

Mr. Pabari further noted that "the Reserve Bank of India is expected to step in to prevent the rupee from breaching the critical 84.00 threshold. The market anticipates that the central bank might sell USD to maintain stability. Additionally, the recent dip in crude oil prices to around $75.48 per barrel could offer the rupee some much-needed relief."

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, gained 0.17% to 101.21 points.

Brent crude, the global oil benchmark, was 0.01% up at $76.06 per barrel in futures trade.