The Indian rupee closed weaker against the US dollar on Tuesday, tracking the strength of the dollar index. However, easing oil prices limited the demand for the greenback. The local currency has been oscillating in a tight range because of intervention by the Reserve Bank of India.
The rupee depreciated 5 paise to close at Rs 83.97 after opening at Rs 83.95 against the US dollar, according to Bloomberg data. It closed at Rs 83.92 against the greenback on Monday.
The Indian rupee now finds itself in a delicate balance, caught in a tug-of-war between positive and negative factors, according to Amit Pabari., managing director of CR Forex Advisors. "It has been trading within a tight range of Rs 83.70-84.05, slipping by around 0.17% in August despite a notable correction in the dollar index."
The RBI's active intervention has kept the rupee within this narrow band, and as long as the central bank maintains its grip, the rupee is likely to remain stable, he said.
Crude oil prices experienced a 0.32% decrease after initially rising due to supply disruptions in Libya.
Brent crude was trading 1.75% lower at $76.16 at 3:37 p.m. IST. Dollar Index was trading 0.16% higher at 101.83 at 3:40 p.m. IST.
Anil Kumar Bhansali, head of Treasury and executive director of Finrex Treasury Advisors LLP, expected the rupee to open at Rs 83.94 as most Asian currencies have started Tuesday on a weaker note. "We need to watch RBI selling dollars near to Rs 83.97 as it keeps a tab over rupee crossing Rs 84."
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