Forex traders noted that the recent drop in oil prices, now around USD 77 per barrel, is a major boost for the rupee due to India's high oil import costs. In the interbank foreign exchange market, the rupee opened at 83.93, strengthened to 83.88, marking a 5 paise increase from its previous close.

Mumbai: Rupee traded in a narrow range and appreciated 5 paise to 83.88 against the US dollar in morning trade on Friday, supported by easing crude oil prices and fresh foreign fund inflows.

Forex traders said significant correction in oil prices, which is hovering around USD 77 per barrel, is a major positive for the rupee, given India’s substantial oil imports.

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At the interbank foreign exchange market, the local unit opened at 83.93 and then gained ground and touched 83.88, registering a rise of 5 paise from its previous close.

On Thursday, the rupee traded in a narrow range and settled lower by 3 paise at 83.93 against the American currency.

“Despite the dollar index reaching a recent low, the Indian rupee remains steadfast, showing little signs of strengthening. This resilience can be attributed to the central bank’s deliberate interventions, aimed at stabilizing the USDINR around the 83.90-95 range,” CR Forex Advisors MD-Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.15 per cent to 101.35 points.

Brent crude, the global oil benchmark, was 0.12 per cent up at USD 77.31 per barrel in futures trade, “In the near term, the rupee is expected to trade within a narrow range, with an upside limit around 83.80 and support around 84.00,” Pabari added.

The domestic equity market witnessed heavy volatility in morning trade, the 30-share BSE Sensex which opened on a positive note was later trading 13.2 points, or 0.02 per cent down, at 81,039.99 points.

The Nifty also witnessed similar movement, it opened on a higher note, but soon pared the gains to trade 8.25 points, or 0.03 per cent lower at 24,803.25 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday as they purchased shares worth Rs 1,371.79 crore, according to exchange data.

On the domestic macroeconomic front, the minutes of the last Monetary Policy Committee (MPC) released by the RBI on Thursday noted that the calibrated increase in policy repo rate by 250 basis points since May 2022 and subsequent change of stance to the withdrawal of accommodation have facilitated gradual disinflation over 2022-23.

According to Reserve Bank Governor Shaktikanta Das, the current policy rate of 6.5 per cent is broadly balanced, and any justification for policy easing at this juncture can be misleading.