Mumbai, Oct 16 (PTI) The rupee witnessed a range-bound trade and strengthened marginally by 2 paise to 84.02 against the US dollar on Wednesday as easing crude oil prices supported investor sentiments.
Forex traders said the rupee traded in a narrow range as a strong dollar and a muted tone in the domestic equities weighed on the local unit, while weak crude oil prices and any likely intervention by the Reserve Bank of India (RBI) supported the local currency at lower levels.
At the interbank foreign exchange market, the local unit opened at 84.03 and traded in a narrow range of 83.98 and 84.07 and finally settled for the day at 84.02, higher by 2 paise over its previous close of 84.04 against the dollar.
"The local currency pair was weighed down by significant foreign fund outflows this month amid strength of the American currency in the overseas market which surged to a two-month high of 103.25.
"Overall Foreign Institutional Investors offloading USD 8 billion in October also weighed on sentiments for rupee in the current month," said Maneesh Sharma, AVP - Commodities & Currencies, Anand Rathi Shares and Stock Brokers.
Analysts said investors are awaiting the US retail sales and jobless claims reports, due on Thursday, for cues on the future path of US policy rates which could provide crucial direction to dollar, while likely intervention by the Reserve Bank of India (RBI) could also support the local currency pair at lower levels.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said weak domestic markets and a surge in the US dollar index weighed on the rupee. However, the weak tone in crude oil prices cushioned the downside.
Also, he said that dollar index is trading at a two-week high, pound sterling fell to a two-month low amid softer-than-expected inflation data from the UK, raising odds of a rate cut by the Bank of England.
"Traders may take cues from retail sales data from the US this week. USD-INR spot price is expected to trade in a range of Rs 83.85 to Rs 84.30," he added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was marginally down by 0.01 per cent to 103.25 points.
Brent crude, the international benchmark, eased 0.31 per cent to USD 74.02 per barrel in futures trade amid easing concerns about supply disruptions due to the Middle East conflict.
In the domestic equity market, the 30-share BSE Sensex declined 318.76 points, or 0.39 per cent, to close at 81,501.36 points, while the Nifty was down 86.05 points, or 0.34 per cent, to 24,971.30 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday, as they offloaded shares worth Rs 3,435.94 crore, according to exchange data.