Rupee rises 11 paise to 83.84 against US dollar in early trade

Mumbai: The Indian rupee appreciated 11 paise to 83.84 against the US dollar in early trade on Monday, mirroring a positive momentum in domestic equities and fresh foreign fund inflows.

Forex traders said the weakening of the American currency in the overseas market and retreating crude oil prices also supported investor sentiments.

At the interbank foreign exchange, the rupee opened at 83.88 against the greenback, then gained ground and touched 83.84, registering a gain of 11 paise over its previous close.

On Friday, the rupee moved in a tight range and settled just 1 paisa lower at 83.95 against the American currency.

Over the past shortened week, the rupee showed minimal fluctuation and narrowly steered clear of the critical 84 mark.

"The rupee emerged as the least volatile among its peer currencies, a testament to the RBI's decisive actions, which were further reflected in the nearly USD 5 billion dip in India's forex reserves from the record high of USD 675 billion," CR Forex Advisors MD Amit Pabari said.

Pabari further said that in the near term, while the RBI may cap the rupee's decline near the 84 level, significant appreciation also seems unlikely. "This outlook is influenced by India's widening trade deficit, which has ballooned to USD 23.5 billion, driven by a surge in oil imports and sluggish export growth," he said.

This week, all eyes are on the Jackson Hole meeting, where global central bankers will gather for their annual conference. The spotlight will be on US Federal Reserve Chairman Jerome Powell's speech, as markets eagerly await insights into the Fed's monetary policy outlook, Pabari said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.26 per cent to 102.19.

Brent crude, the global oil benchmark, declined 0.19 per cent to USD 79.53 per barrel.

On the domestic equity market front, Sensex advanced 116.78 points, or 0.15 per cent, to 80,553.62 points. The Nifty rose 68.35 points, or 0.28 per cent, to 24,609.50 points.

Foreign institutional investors (FIIs) were net buyers in the capital markets on Friday, as they purchased shares worth Rs 766.52 crore, according to exchange data.

Meanwhile, India's forex reserves dropped by USD 4.8 billion to USD 670.119 billion for the week ended August 9, the Reserve Bank of India said on Friday. In the previous reporting week, the kitty jumped by USD 7.533 billion to an all-time high of USD 674.919 billion.