The rupee pared initial losses to settle on a flat note at 76.27 against the US dollar on Monday amid weakening of the greenback in the international market.
Forex traders said the rupee is trading in a narrow range as losses in the greenback supported the rupee, while weak domestic equities weighed on the local unit.
Moreover, investor confidence strengthened after the minutes of the central bank’s policy meeting revealed that the RBI will use any instrument necessary to revive growth and preserve financial stability.
“The Reserve Bank will continue to remain vigilant and will not hesitate to use any instrument – conventional and unconventional – to mitigate the impact of Covid-19, revive growth and preserve financial stability,” Reserve Bank of India (RBI) Governor Shaktikanta Das said.
At the interbank foreign exchange market, the local currency opened at 76.32, but witnessed heavy volatility and touched a low of 76.45 against the American currency.
The domestic unit pared the losses and finally settled at 76.27 against the greenback, up 1 paise over its previous close.
The rupee had settled at 76.28 against the US dollar on Thursday. Forex market was closed on April 10 on account of Good Friday.
Forex traders said market participants are concerned that a sharp rise in coronavirus cases could weigh on the economy.
The number of deaths around the world linked to the new coronavirus has crossed over 114,000. In India, more than 9,100 coronavirus cases have been reported so far.
Brent crude futures fell 1.08 per cent to USD 31.19 per barrel.
“Rupee found some stability on the back of OPEC+ cutting down production as market participants had expected heavy cuts beyond 15 million BPD and with 9.7 million BPD cut crude prices will not have strong support to bounce which has helped the rupee to float around 76.30 odd levels,” said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.
Members of the Organisation of the Petroleum Exporting Countries (OPEC) and their allies announced on Sunday that they have agreed to slash production by 9.7 million barrels per day (BPD) in May and June. The slashing of the global output by about 10 per cent is among the deepest cuts ever agreed to by the world’s oil producers.
Trivedi further said that going ahead “the lockdown position India is not likely to help the rupee”.
Meanwhile, foreign institutional investors (FIIs) were net buyers in the capital markets, as they bought shares worth Rs 1,737.62 crore on Thursday, according to the provisional data.
On the domestic market front, the 30-share BSE barometer ended 469.60 points or 1.51 per cent lower at 30,690.02. Similarly, the NSE Nifty dropped 118.05 points or 1.30 per cent to 8,993.85.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell by 0.08 per cent to 99.40.
“Rupee opened lower against the US dollar and consolidated in a narrow range ahead of the important inflation number that will be released this evening,” said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Somaiyaa further noted that “volatility for major crosses also remained low as the major global market remained shut on account of Easter holidays. We expect the rupee (Spot) to quote in the range of 75.70 and 76.50.”
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 76.4577 and for rupee/euro at 82.9153. The reference rate for rupee/British pound was fixed at 94.5420 and for rupee/100 Japanese yen at 70.18.
The forex market will remain closed on April 14 on account of Baba Saheb Ambedkar Jayanti.