Representative image of dollars and rupees together.
Credit: iStock
Mumbai: The rupee traded in a narrow range against the US dollar in early trade on Wednesday, as the support from positive domestic equities was negated by month-end dollar demand.
Forex traders said the main factors influencing the rupee are geopolitical developments.
Moreover, the Reserve Bank of India has also been intervening on both the buy and sell sides to keep the rupee within a range of 87.50 to 88.50, they said.
At the interbank foreign exchange market, the rupee opened at 88.21, and touched an early low of 88.34 and a high of 88.18 against the greenback, registering a gain of 11 paise from its previous close.
On Tuesday, the rupee depreciated by 10 paise to close at 88.29 against the US dollar.
"Today the rupee is expected to open almost flat amid mixed macro-economic factors and major Central Banks’ meetings starting with BoC, FED, BoJ and culminating with ECB on Thursday," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.14 per cent to 98.81.
Brent crude, the global oil benchmark, fell 0.08 per cent to USD 64.35 per barrel in futures trading.
"All eyes are now on the Federal Reserve's FOMC meeting, where a 25-basis-point rate cut is almost certain. However, what will truly shape the market's direction is the Fed's tone — whether it signals more rate cuts ahead or hints at taking a pause," CR Forex Advisors MD - Amit Pabari said.
For the rupee, the resistance is around 88.40 and support is near 87.60–87.70. A decisive move below that zone could open the door for a further slide toward 87.20, Pabari added.
On the domestic equity market front, Sensex climbed 287.94 points to 84,916.10 in early trade, while the Nifty was up 86.65 points to 26,022.85.
Foreign Institutional Investors purchased equities worth Rs 10,339.80 crore on Tuesday, according to exchange data.