The Indian rupee traded within a narrow range against the US dollar in early trading on Friday

The Indian rupee traded within a narrow range against the US dollar in early trading on Friday. Although positive domestic equities provided support to the currency, it was offset by elevated crude oil prices. Forex traders noted that the strength of the American currency in the overseas market and significant foreign fund outflows had a negative impact on investors’ sentiments.

At the interbank foreign exchange market, the local unit opened at 83.48 and touched 83.46 during the initial trade, resulting in a gain of 2 paise from its previous close. On Thursday, the rupee had closed at 83.48 against the American currency

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, explained that FPIs outflows continued to trigger demand for the US dollar, causing the rupee to be sold off again on Thursday. Bhansali also expects the same trend on Friday, with the RBI continuing its control at 83.50.

Meanwhile, the dollar index, which measures the greenback’s strength against six other currencies, was at 105.30, an increase of 0.07%. Brent crude futures, the global oil benchmark, rose 0.55% to USD 84.34 per barrel.

On the domestic equity market, the 30-share BSE Sensex was trading up 169.82 points, or 0.23%, at 72,573.99 points. The broader NSE Nifty was up 67.05 points, or 0.31%, at 22,024.55 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 6,994.86 crore, according to exchange data. Bhansali added that FPIs had offloaded Rs 22,858 crore in six market sessions in May 2024, while DIIs (Domestic Institutional Investors) had bought shares worth Rs 16,700 crore. The reasons for this sell-off were uncertainty in election results and higher US treasury yields.