Rupee closes flat at 83.96 against US dollar

The rupee traded on a flat note and settled at 83.96 (provisional) against the US dollar on Friday as surging crude oil prices amid volatile geopolitics weighed on the local unit, while the Reserve Bank intervened to prevent the domestic currency from touching its lowest level.

Forex traders said a weak American currency against major Asian rivals as well as the RBI's move to sell dollars supported the local unit. However, it was weighed down by weak domestic equity markets and unabated outflow of foreign funds.

At the interbank foreign exchange, the local unit opened at 83.96 and moved between a narrow range of 83.93 and 83.97 against the greenback. The unit failed to recover from its deep plunge witnessed in previous sessions, and ended flat at 83.96 (provisional) against the dollar.

On Thursday, the rupee slid 14 paise to settle at 83.96 against the American currency. The unit had touched its all-time low of 84.09 on August 5.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee traded nearly flat amid reports of the Reserve Bank of India selling dollars in the short-term offshore markets, which prevented the Indian currency from hitting a new record low. However, weak domestic markets, a strong dollar and a surge in crude oil prices weighed on the rupee.

Choudhary said the rupee is expected to trade with a negative bias on risk aversion in the global markets and a strong dollar amid escalating tensions between Israel and Iran.

"FII outflows and elevated crude oil prices may further pressurise the rupee. Traders may take cues from non-farm payrolls report from the US. The USD-INR spot price is expected to trade in a range of ₹83.75 to ₹84.20," he added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.11 per cent to 101.87.

Brent crude, the international benchmark, climbed 1.12 per cent to $78.49 in futures trade.

On the domestic equity market front, the Sensex extended its sharp loss from the previous session and crashed another 808.65 points, or 0.98 per cent, to settle at 81,688.45. The Nifty also tanked 200.25 points, or 0.79 per cent to close the session at 25,049.85. Both the indices had tumbled over 2 per cent on Thursday.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, offloading shares worth ₹15,243.27 crore on a net basis in the cash segment, according to exchange data.

FIIs have sold shares worth over ₹30,000 crore since Monday as they turned bullish towards the Chinese market, betting on various economic stimulus measures announced by the country.

Meanwhile, a monthly survey released on Friday showed India's services sector activity fell to a 10-month low in September as new business, international sales and output growth moderated.

The seasonally adjusted HSBC India Services Business Activity Index fell from 60.9 in August to 57.7 in September, indicating that the output registered an increase, but at the slowest rate since November 2023.