Rupee opens on a flat note against US dollar in early trade

The rupee opened on a flat note against the US dollar in the morning session on Thursday, January 25, 2024, mid a muted trend in domestic equities.

Forex traders said the rupee is trading in a narrow range as rising crude oil prices, strong American currency, and sustained foreign fund outflows dented sentiments.

At the interbank foreign exchange, the rupee opened at 83.13 against the dollar and touched an initial high of 83.11 and an early low of 83.14 against the greenback.

On Wednesday, the rupee had settled at 83.12 against the US dollar.

“Against the given odds favouring the rupee, challenges persist primarily due to the strengthening US Dollar, geopolitical tensions, and the ongoing Red Sea issue,” CR Forex Advisors MD Amit Pabari said.

Widening liquidity deficit

Additionally, India’s liquidity deficit has widened to ₹3.34 trillion (USD 40.18 billion) as of January, limiting the Reserve Bank of India from allowing the rupee to appreciate towards its fair value.

Despite these obstacles, the overall outlook suggests a delicate balance, with positive factors outweighing the negative ones. After consolidating for some more days in the range of 82.80-83.30, the pair may break out of its month-old range and likely move towards 82.50 and 82.00 levels over the next 2-3 months, Pabari added.

Meanwhile, Brent crude futures, the global oil benchmark, was trading higher by 0.31 per cent to USD 80.29 per barrel.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally higher by 0.08 per cent at 103.32.

In the domestic equity market, the 30-share BSE Sensex was trading 208.38 points, or 0.29 per cent, lower at 70,851.93 points. The broader NSE Nifty fell 37.95 points, or 0.18 per cent, to 21,416.00 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth ₹6,934.93 crore, according to exchange data.