Mumbai, Aug 13: The rupee traded in a tight range and slipped 6 paise to 87.69 against the US dollar in morning trade on Wednesday as depreciation pressures are still lingering amid persistent foreign fund outflows.
Forex traders said the rupee is trading in a narrow range as the Reserve Bank of India has stepped up its efforts to curb excessive rupee depreciation.
At the interbank foreign exchange market rupee opened at 87.63, then touched an intra-day low of 87.69 against the US dollar in initial trade, lower by 6 paise from its previous close.
On Tuesday, the rupee appreciated 12 paise to close at 87.63 against the US dollar.
In initial trade, the rupee touched an early high of 87.61 against the greenback.
Following the US CPI release, the probability of a Fed rate cut on September 17 rose sharply to 90 per cent from 82 per cent, CR Forex Advisors MD Amit Pabari said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, declined 0.08 per cent to 98.01, as markets continued to price in a September US rate cut.
Brent crude, the global oil benchmark, was up 0.09 per cent at USD 66.18 per barrel in futures trade.
On the domestic front, India’s July retail inflation cooled sharply to 1.55 per cent, marking the lowest level since June 2017.
“Price pressures undershooting the Reserve Bank of India’s inflation target are paving the way for more interest rate cuts this year, adding downward pressure on the rupee,” Pabari said.
“Amidst pressures, the Reserve Bank of India has reportedly stepped up its efforts to curb excessive rupee depreciation, selling at least USD 5 billion in both onshore and offshore markets this month.
“While these interventions have provided short-term relief, persistent headwinds, including escalated trade tensions from higher US tariffs, continue to leave the rupee vulnerable and depreciation risks alive,” he added.
On the domestic equity market front, the Sensex climbed 327.79 points to 80,563.38 in early trade, while the Nifty was up 112.15 points to 24,599.55.
Foreign Institutional Investors offloaded equities worth Rs 3,398.80 crore on Tuesday, according to exchange data. (PTI)
