Mumbai, Mar 17 (PTI) The rupee appreciated 25 paise to 86.80 against the US dollar in early trade on Monday, as domestic equities opened on a higher note and Asian currencies continued to remain on the stronger side.
Forex traders said the rupee could extend its gains in the near-term, as the dovish Fed expectation has pressured the greenback, further aiding the rupee’s recovery.
However, global risk sentiment and oil price movements will play a crucial role in determining the next leg of the rupee’s trajectory.
At the interbank foreign exchange, the rupee opened at 86.90 against the greenback, then gained some ground and touched 86.80 against the greenback, up 25 paise from its previous close.
On Thursday, the rupee surged 17 paise to settle at 87.05 against the US dollar.
Forex, stock markets were closed on Friday on the occasion of Holi festival.
“The USD/INR pair is expected to trade within the 86.80-87.40 range in the near to medium-term. A breakout beyond this band could trigger an additional move of 30-50 paise in the same direction, keeping market participants on high alert for potential volatility,” CR Forex Advisors MD Amit Pabari said.
Market participants will also keep a close watch on the RBI’s stance, as potential intervention could impact the rupee movement.
Meanwhile, the US dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01 per cent lower at 103.70.
Brent crude, the global oil benchmark, was trading 0.71 per cent higher at USD 71.08 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex was trading 405.89 points, or 0.55 per cent, higher at 74,234.80 points, while the Nifty was up 153.65 points, or 0.69 per cent, at 22,550.85 points.
Foreign institutional investors (FIIs) offloaded equities worth Rs 792.90 crore on net basis on Thursday, according to exchange data.
Meanwhile, the country’s foreign exchange reserves increased by USD 15.267 billion to USD 653.966 billion during the week ended March 7, according to the RBI.
The overall reserves had dropped by USD 1.781 billion to USD 638.698 billion in the previous week.
The reserves had been on a declining trend recently due to revaluation along with forex market interventions by RBI to help reduce volatilities in the rupee.
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