Rupee sees high volatility against US dollar in early trade

MUMBAI: The rupee witnessed high volatility in morning trade on Wednesday, as the support from positive domestic equities was weighed down by significant pressure from global uncertainties prompting investors to take the cautious path.

Forex traders said the overall uncertainty about the global economy continued to weigh on both currencies and commodities, keeping investors on edge.

At the interbank foreign exchange, the rupee opened at 86.56, and fell to a low of 86.71 against the greenback in a highly volatile morning session.

On Tuesday, the rupee fell 13 paise to 86.58 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.07 per cent at 108.13.

Brent crude, the global oil benchmark, rose by 0.09 per cent to USD 79.36 per barrel.

Domestically, the Indian markets faced significant pressure from global uncertainties, and foreign investors sold more than USD 7 billion during this month pressuring the rupee and Indian markets, CR Forex Advisors MD Amit Pabari said.

"However, there is a silver lining ahead with better budget allocations and a decline in crude oil prices may provide much-needed support to the rupee. However, with the Union Budget around the corner, market volatility is likely to persist as traders remain cautious," Pabari said.

Looking ahead, the USD/INR pair is projected to trade between 86.20 and 86.80, as markets remain cautious amid ongoing global uncertainties, he added.

On the domestic equity market front the 30-share sensitive index Sensex opened on a positive note and was trading 224.31 points or 0.30 per cent higher at 76,062.67 in early trade. Similarly, the wide-based Nifty was trading higher by 37.70 points or 0.16 per cent at 23,062.35.

Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Tuesday, as they offloaded shares worth Rs 5,920.28 crore, according to exchange data.