Rupee settles almost flat against US dollar

Mumbai : The rupee slipped 1 paisa to 83.28 against the US dollar on Monday amid a weak trend in domestic equities and surging crude oil prices in the international markets. Forex traders said the safe-haven dollar gained ground due to heightened concerns in the Middle East.

At the interbank foreign exchange, the domestic unit opened at 83.24 and finally settled at 83.28 against the American currency, registering a fall of just 1 paisa. During the day, the rupee witnessed an intra-day high of 83.21 and a low of 83.28 against the greenback. On Friday, the rupee had declined 2 paise to settle at 83.27 against the US dollar.

"The rupee traded flat between 83.20-83.25 on a very delicate day where overall markets tried to price in the effects of middle effect geopolitical tensions with an attack marking the deadliest day of violence in the region in 50 years. "The RBI seems to be holding the rupee fall as 83.30 keep taking support but Crude & dollar rise may not let the rupee rise above 83.10 as well.

Going ahead rupee can be seen in the range of 83.10-83.50 with weakness in the rupee can continue and sharp correction can be seen if the rupee falls below 83.40," Jateen Trivedi, VP Research Analyst at LKP Securities, said. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.43 per cent higher at 106.49. Brent crude futures, the global oil benchmark, rose 3.29 per cent to USD 87.36 per barrel.

"Rising geopolitical risk could see buying in assets like gold and the dollar, and potentially boost demand for US Treasuries, which have been sold off aggressively. As far as the rupee is concerned, if the Israel-Hamas conflict escalates, RBI would have to decide between whether to keep exhausting reserves to defend the rupee or to let it adjust.

Currently, The Israel situation is not yet serious for markets. "If the conflict broadens into a potential Iran war, the global economy will be surely impacted, generating potential risk aversion. As of now, oil is higher from recent lows, but not enough to cause ripples in markets," Rinkle Vira, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers, said.

The market is awaiting FOMC meeting minutes due on Wednesday, while important data due on Tuesday are speeches by the ECB president and IMF/World Bank meetings. On the domestic equity market front, the BSE Sensex closed 483.24 points or 0.73 per cent lower at 65,512.39. The broader NSE Nifty declined 141.15 points or 0.72 per cent to 19,512.35.

The risk premiums have been added to crude oil prices on Monday after the eruption of dramatic military clashes between Israeli and Hamas forces over the weekend, which has deepened political uncertainty across the Middle Eastern region, Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas - said. Foreign Institutional Investors (FIIs) were net sellers in the capital market on Monday as they offloaded shares worth Rs 997.76 crore, according to exchange data. Meanwhile, India's forex reserves dropped further by USD 3.794 billion to USD 586.908 billion for the week ended September 29, the Reserve Bank said on Friday. In the previous reporting week, the overall reserves had declined by USD 2.335 billion to USD 590.702 billion as of September 22