Indian rupee continues to rally amid strong domestic cues; reaches 83.39 against US dollar

Mumbai: The rupee appreciated 5 paise to 83.39 against the US dollar in early trade on Monday, supported by a firm trend in domestic equities. Forex traders said the local unit gained ground as the American currency and crude oil prices retreated from their elevated levels.

At the interbank foreign exchange market, the local unit opened at 83.40 against the greenback. It later touched 83.39 in initial trade, registering a rise of 5 paise from its previous close.

On Friday, the rupee appreciated 8 paise to close at 83.44 against the US dollar.

Forex traders said there was likely some intervention by the Reserve Bank of India which resulted in the pullback of the local unit.

"The Indian forex reserves fell to USD 643.162 billion after rising for 7 weeks in succession as the Reserve Bank of India (RBI) would have sold dollars to rein in the rupee," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

Meanwhile, India's forex reserves dropped by USD 5.401 billion to USD 643.162 billion for the week ended April 12, the Reserve Bank said on Friday. The overall reserves increased USD 2.88 billion to a new high of USD 648.562 billion in the previous reporting week.

"The RBI will be present to keep a tab over the depreciation while oil companies and FPIs buy dollars," Bhansali said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 106.07, lower 0.07 per cent.

Brent crude futures, the global oil benchmark, fell 0.76 per cent to USD 86.63 per barrel.

On the domestic equity market front, the 30-share BSE Sensex climbed 295.86 points or 0.40 per cent to 73,384.19 in early trade. The NSE Nifty advanced 106.00 points or 0.48 per cent to 22,253.00.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they purchased shares worth Rs 129.39 crore, according to exchange data.