The rupee traded in a narrow range and fell 3 paise to 88.78 against the US dollar in early trade on Thursday, as investors are watching US fiscal developments, trade tariff issues and FPI trends for further cues.
Forex traders said all positive trends in domestic equities supported the rupee at lower levels.
At the interbank foreign exchange market, the rupee opened at 88.76 and then lost ground to touch 88.78 against the US dollar, registering a decline of 3 paise from its previous close.
On Wednesday, the rupee closed at 88.75 against the greenback. The Indian rupee is expected to trade in the narrow range of 88.70 to 88.80 with FPIs buying around USD 10.2 million mainly on account of investment in the IPOs, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
Bhansali further noted that the RBI was present at 88.80, thus still not allowing the rupee to cross 88.80 against the US dollar.
"The US Government shutdown and India’s trade tariffs issue with the US are the main issues to be tackled for any direction to the rupee trade," he said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.20 per cent lower at 98.72.
Brent crude, the global oil benchmark, was trading lower by 0.50 per cent at USD 65.91 per barrel in futures trading.
On the domestic equity market front, the Sensex was up 201.23 points to 81,974.89 in early trade, while the Nifty climbed 63.5 points to 25,109.65.
Meanwhile, Foreign Institutional Investors on Wednesday bought equities worth Rs 81.21 crore, according to exchange data.
