The rupee rose 1 paisa to 86.67 against the US dollar in early trade on Monday amid a weakening greenback against international currencies.
However, a sharp fall in the domestic equity markets in morning trade, a decline in the country’s forex reserves and sustained FII outflows prevented further gains, forex traders said.
At the interbank foreign exchange, the domestic unit opened at 86.58, up 10 paise against the US dollar, but gave up initial gains to reach 86.67, just 1 paisa higher than Friday’s close. On Friday, the rupee pared initial gains and settled 4 paise lower at 86.68 against the US dollar.
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The rupee is expected to trade in a range of 86.35-75 as the market gives opportunity for both exporters and importers to sell and buy their currencies, Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.39 per cent lower at 106.19.
“The dollar has slid more than 3 per cent from its January peak on tariff issues leaving little appetite for traders to load up on fresh dollar holdings. Data on Friday showed business activity nearly stalled in February… as surveys showed business and consumers were increasingly rattled by the Trump administration policies,” Bhansali said.
Brent crude, the global oil benchmark, traded flat at $74.43 per barrel in futures trade.
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In the domestic equity market, the 30-share BSE Sensex Sensex fell sharply by 567.62 points to 74,743.44 in early trade, while Nifty dropped 188.4 points to 22,607.50.
Foreign institutional investors (FIIs) offloaded equities worth ₹3,449.15 crore on a net basis on Friday, according to exchange data.
The latest RBI data released on Friday showed India’s forex reserves dropped by $2.54 billion to $635.721 billion in the week ended February 14, snapping the three-week streak of increase.
In the previous reporting week, the reserves had increased by $7.654 billion to $638.261 billion.