The rupee fell by 7 paise to 84.73 against the US dollar in early trade on Monday. It was dragged down by foreign fund outflows and muted trends in domestic equities.
In interbank forex, the rupee opened at 84.70 against the greenback, then registered a decline of 7 paise from the previous close, settling at 84.73 in early trade.
The rupee rose 5 paise to settle at 84.66 against the US dollar on Friday.
“On the domestic front, all eyes will be on industrial production (IIP) and CPI data following last week’s RBI monetary policy announcement. The 50-basis point CRR cut provided much-needed liquidity and provided support to the rupee,” said Amit Pabari, MD, CR Forex Advisors.
On Friday, the Reserve Bank of India kept its key interest rate unchanged, citing inflation risks, but cut the ratio of cash reserves banks need to park with the central bank, raising money with lenders to support a slowing economy.
Pabari said the wave of IPO activity is expected to increase the money flow substantially, providing further support to the currency.
“We expect the rupee’s fall to remain limited, with the USDINR pair likely to trade in the 84.50 to 85 range in the near term,” Pabari added.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading up 0.08 percent at 106.14.
Global oil benchmark Brent crude rose 0.08 percent to $106.15 a barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex was trading up 76.29 points or 0.09 per cent at 81,632.83 in the morning trade, while the Nifty was down 24.20 points or 0.1 per cent at 24,653.60.
Foreign institutional investors (FIIs) on Friday offloaded Rs 1,830.31 crore on a net basis in the capital market, according to exchange data.
Meanwhile, India’s foreign exchange reserves rose by USD 1.51 billion to USD 658.091 billion in the week ended November 29, the RBI said on Friday.
Last week, the total reserves decreased by 1.31 billion US dollars to 656.82 billion US dollars.