The rupee traded in a narrow range against the US dollar in early trade on Thursday, as forex traders noted that the prolonged West Asia crisis poses a major risk for India due to its heavy reliance on energy imports.
At the interbank foreign exchange market, the domestic unit opened at 82.90 and moved in a tight range of 82.88 to 82.95 against the greenback in initial deals. It finally quoted at 82.92, almost flat from its previous close of 82.91.
Forex traders said the ongoing tensions in West Asia have kept the market on edge, as any escalation could lead to a spike in crude oil prices, which would impact India's import bill and widen the current account deficit. India meets over 80% of its oil requirements through imports, making it vulnerable to geopolitical shocks in the region.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04% lower at 104.12. Brent crude futures, the global oil benchmark, rose 0.15% to $83.10 per barrel.
On the domestic equity market front, the 30-share BSE Sensex was trading 112.45 points or 0.15% higher at 74,323.54, while the broader NSE Nifty gained 38.20 points or 0.17% to 22,612.40.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Wednesday, as they offloaded shares worth Rs 1,245.60 crore, according to exchange data.
Analysts expect the rupee to remain range-bound in the near term, with the Reserve Bank of India likely to intervene to prevent excessive volatility. The central bank has been actively managing the currency through dollar sales and other measures to keep it stable amid global uncertainties.
