The rupee was trading in a narrow range against the US dollar in early trade on Thursday, tracking a weak trend in domestic equities and elevated crude oil prices.
Forex traders said the USD/INR pair is expected to remain range-bound as the dollar demand from foreign investors and oil companies has been matched by the supply from the Reserve Bank of India (RBI).
At the interbank foreign exchange market, the local unit moved in a narrow range. It opened at 83.57 against the American currency and touched 83.55 in initial trade, registering a rise of 3 paise from its previous close.
On Wednesday, the rupee closed at 83.58 against the American currency.
"Despite a weakening dollar and the rise of peer currencies like the Chinese yuan and Japanese yen to 7.26 and 155.36 respectively, the rupee has yet to find traction," CR Forex Advisors MD Amit Pabari said.
Pabari further said: "It appears that the RBI is the key force behind the rupee's firm stance. Even amid a weakening dollar, robust fundamentals and significant flows, the rupee has shown no significant upward movement, as the RBI strategically absorbs inflows to bolster reserves." Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 103.80, marginally higher by 0.05 per cent.
Brent crude futures, the global oil benchmark, rose 0.41 per cent to USD 85.43 per barrel.
On the domestic equity market, the 30-share BSE Sensex was trading 219.58 points, or 0.27 per cent lower at 80,496.97 points. The broader NSE Nifty was down 80.25 points, or 0.33 per cent, to 24,532.75 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday as they purchased shares worth Rs 1,271.45 crore, according to exchange data.
Meanwhile, the Asian Development Bank (ADB) on Wednesday maintained India's GDP growth forecast at 7 per cent for the current financial year, citing that a rebound in agriculture is expected given above-normal monsoon projections.
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