Rupee Closes Flat Against The Dollar

The Indian rupee closed flat against the US dollar on Wednesday as crude oil prices declined along with a weak dollar index.

The rupee closed at Rs 83.97 after opening stronger by two paise at Rs 83.95 against the US dollar, according to Bloomberg data. The domestic currency had closed at Rs 83.97 against the greenback on Tuesday.

Oil prices plunged almost 5% on Tuesday as weak global demand persisted on a possible easing of political unrest in Libya. Brent was hovering around $73 a barrel and West Texas Intermediate was below $70 for the first time since early January, according to Bloomberg.

The sluggish data of US factory output reignited expectations of the economy's soft landing as stocks marked the sharpest fall since the Aug. 05 rout. Any further deterioration of the US economy could also weaken the dollar index, potentially pushing it below the critical 100.50 support level, according to Amit Pabari, managing director, CR Forex Advisors.

Indian rupee should be protected by the RBI as FPIs may sell Indian equity and be buyers of dollars, Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors, said.

"Oil companies may also step in to buy $ as oil fell to its lowest since mid-December below $75, which was acting as a support for all these days."

The US Dollar Index was 0.16% lower at 101.67 at 3:49 p.m. IST, and Brent Crude was 0.56% lower at $73.36 at 3:50 p.m. IST.

Exporters may wait and watch for further weakness with a stop loss at Rs 83.75 for hedging while importers can buy dips, Bhansali said.

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