Rupee falls 4 paise to 88.30 against US dollar in early trade

Mumbai: The rupee witnessed range-bound trading in morning deals on Monday and depreciated 4 paise to 88.30 against the US dollar, as tariff-led pressure on India's exports weighed on investor sentiments.

Forex traders said the rupee traded in a tight range as it is caught between worries over US trade tariffs, persistent foreign portfolio outflows, and hopes of a US rate cut.

At the interbank foreign exchange market, the rupee opened at 88.25, then lost ground and touched a low of 88.30 against the US dollar, registering a decline of 4 paise over its previous close.

On Friday, the Indian rupee recovered from all-time lows and settled for the day higher by 9 paise at 88.26 against the US dollar.

"The rupee has been under constant pressure but for the likely intervention of the RBI which has helped in controlling volatility and preventing a quick depreciation. Recently RBI could have sold around USD 5-6 billion to support the rupee. These efforts are aimed at exacerbating international trade tensions and maintaining market confidence," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

Bhansali further noted that market attention has now shifted to what the FED will do on September 17, with expectations of a rate cut creating uncertainty around the dollar's future strength.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.07 per cent to 97.61.

Brent crude, the global oil benchmark, was trading 0.58 per cent higher at USD 67.38 per barrel in futures trade.

On the domestic equity market front, Sensex was up 93.81 points to 81,998.51 in early trade, while the Nifty rose 24.45 points to 25,138.45.

Foreign Institutional Investors purchased equities worth Rs 129.58 crore on Friday, according to exchange data.

The Reserve Bank data showed on Friday that the country's forex reserves jumped USD 4.038 billion to USD 698.268 billion during the week ended September 5 on the back of a sizable increase in value of gold reserves.

In the previous week, the overall reserves had jumped by USD 3.51 billion to USD 694.23 billion.

Meanwhile, US Commerce Secretary Howard Lutnick asserted that New Delhi must bring down its tariffs or face a “tough time” doing business with the US.

Lutnick made the comments during an interview on Saturday when he was asked whether the US is mismanaging “very valuable relationships” with “important allies” like India, Canada and Brazil with the tariffs imposed on these countries.

“The relationship is one way, they sell to us and take advantage of us. They block us from their economy, and they sell to us while we are wide open for them to come in (and) take advantage,” Lutnick said.