Indian Rupee Trades in Narrow Band for Second Straight Session
The Indian rupee remained confined to a tight range on Wednesday, closing at 90.96 on a provisional basis against the US dollar. The domestic currency slipped marginally by 1 paisa compared to its previous close of 90.95, reflecting cautious sentiment in the foreign exchange market.At the interbank foreign exchange market, the rupee opened at 90.94 against the dollar and moved within a narrow band throughout the session before settling at 90.96. This marks the second consecutive day of range-bound trading.
Weaker Dollar and Equity Gains Provide Support
Forex traders indicated that a softer US dollar and positive domestic equity market sentiment helped limit losses in the rupee.The dollar index, which tracks the greenback against a basket of six currencies, was down 0.05 percent at 97.79, offering some support to emerging market currencies including the rupee.
Domestic stock markets ended higher on Wednesday. The BSE Sensex climbed 50.15 points to close at 82,276.07, while the NSE Nifty rose 57.85 points to settle at 25,482.50. The rebound in equities contributed to stabilising the local currency.
Crude Oil Prices and Geopolitical Tensions Cap Gains
Despite early strength, the rupee reversed gains as global crude oil prices remained elevated and geopolitical concerns persisted.Brent crude, the global oil benchmark, rose 0.06 percent to USD 70.76 per barrel in futures trade. Higher crude prices typically exert pressure on the rupee, as India is a major oil importer.
Market participants are also tracking geopolitical tensions between the US and Iran, along with ongoing trade tariff uncertainty. Negotiations between the two nations are expected to take place on Thursday, adding to market caution.
Foreign Fund Outflows Add Pressure
Foreign institutional investors continued to pare exposure to Indian equities. On Tuesday, FIIs offloaded shares worth Rs 102.53 crore, according to exchange data. Persistent foreign fund outflows tend to weigh on the rupee by increasing demand for the US dollar.USD-INR Outlook and Trading Range
Market participants expect the USD-INR spot pair to remain within a defined band in the near term. A weaker dollar and potential support measures may cushion downside levels, while crude oil prices and geopolitical developments are likely to influence movement.The rupee is expected to trade in the range of Rs 90.70 to Rs 91.20 in the short term, as traders monitor global cues, oil price trends, and capital flows closely.
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