Rupee fluctuates in a narrow range in early trading

13 Oct 2022 , 01:50 PM

Amid dismal local macroeconomic data, the rupee was trading in a constrained range against the US dollar in early trade on Thursday. It also tracked a subdued trend in domestic markets.

Range-bound trading of the rupee was seen in the first dealings at the interbank foreign exchange. In terms of the US dollar, it started off at 82.30 before rising to 82.29, gaining 4 paise from the previous closing. The morning trading saw it fluctuate within a narrow range of 82.25 to 82.34.

To settle at 82.33 versus the US dollar on Wednesday, the rupee lost 12 paise. According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the rupee began the day with modest gains before US CPI data that may help investors gauge the extent of rate rises the Fed is expected to deliver this year.

However, most Asian and emerging market peers were weaker this Thursday morning as the FOMC minutes showed that the Fed will maintain its aggressive monetary policy stance and will cap gains for the local unit, Iyer added. A decline in crude prices could help sentiments, but Iyer noted that most Asian and emerging market peers were weaker.

The dollar index, which measures how strong the dollar is relative to a basket of six different currencies, decreased by 0.02 % to 113.29. The benchmark for world oil, Brent crude futures, is up 0.1% to USD 92.46 a barrel.

The 30-share BSE Sensex was down 109.06 points, or 0.19 %, at 57,516.85 on the domestic equities market, while the larger NSE Nifty was down 25.85 points, or 0.15 %, at 17,097.75. According to exchange statistics, Foreign Institutional Investors (FIIs) sold shares worth Rs 542.36 crore on Wednesday, making them net sellers in the capital markets.

In terms of internal macroeconomics, increasing food prices caused retail inflation to reach a five-month high of 7.4%, while India’s industrial production fell to an 18-month low in August, dropping by 0.8%, mostly as a result of a decline in output from the manufacturing and mining sectors.

The pressure on the Reserve Bank of India (RBI) to increase interest rates once again to control excessive prices will increase as consumer price index (CPI)-based inflation rises for the second month in a row.

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