Rupee trades in narrow range against U.S. dollar in early trade

The rupee traded in a narrow range during the morning trade on Wednesday, as the support from positive domestic equities was negated by the strengthening of the American currency in the overseas market.

At the interbank foreign exchange market, the local unit opened at 83.86 but soon pared the gains to trade at 83.92, unchanged from its previous close.

On Tuesday, the rupee recovered from its all-time low level and settled for the day 17 paise higher at 83.92 against the US dollar.

The local unit had slumped 37 paise to settle at an all-time low of 84.09 against the US dollar on Monday.

Forex traders said risk aversion in the global markets, escalation of geopolitical tensions in the Middle East and outflows by foreign investors further dented investor sentiments.

"Indian rupee is expected to open at 83.91 after a fall to 83.96 on Tuesday, with dollar demand gaining traction but the RBI selling dollars to keep the rupee within 84 levels," said Anil Kumar Bhansali, Head of Treasury and Executive Director of Finrex Treasury Advisors LLP.

For the day, the rupee looks to be in a range of 83.85 to 84.05, but all depends on the Reserve Bank as to where it wants the rupee to be in the coming days, Bhansali added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, gained 0.28% to 103.26 points.

Brent crude, the global oil benchmark, rose 0.20% at $76.63 per barrel in futures trade.

"Brent oil prices dipped to $76.54 per barrel as mixed reading on inventories and demand concerns over slowing economic growth and weak demand kept prices under pressure," Bhansali said.