The rupee traded in a narrow range and settled for the day higher by 4 paise at 83.97 (provisional) against the U.S. dollar on Thursday (September 7, 2024), on weakening of the American currency in the overseas market and an overall drop in crude oil prices.

Forex traders said the domestic unit witnessed a slight negative bias on weak global equities and concerns over global economic growth. Moreover, dollar demand from importers also dented investor sentiments.

At the interbank foreign exchange market, the local unit opened at 83.98 and witnessed an intraday high of 83.97 against the American currency.

The domestic unit finally settled for the day at 83.97 (provisional), higher by 4 paise over its previous close.

On Wednesday, the rupee breached the crucial 84-mark for the second time within a month and settled 3 paise lower at 84.01 against the American currency.

"The Indian rupee which continued to drop to a record low witnessed a range-bound trading session as it stayed wedged between negative global cues and intervention from the central bank," said Maneesh Sharma, AVP - Commodities & Currencies, Anand Rathi Shares and Stock Brokers.

Sharma further noted that the rupee was pressured by dollar demand from importers for meeting their immediate and futures payments. There have been several instances since last month wherein the Reserve Bank defended the rupee near 84 levels.

According to Sharma, data from RBI also showed foreign exchange reserves hit a record high of $681.69 billion at the end of last month revealing the central bank has been buying dollars amid expectations of rate cuts by the U.S. Federal Reserve.

With rising interest rate differentials from the U.S. due to rate cuts to take place starting the current month, Indian rupee is expected to strengthen further in coming months.

"Overall we anticipate rupee to slightly strengthen in tomorrow trade to 83.90 – 83.85 sub levels amid expectations of rate cut to persist ahead of crucial non-farm payrolls due to be released on Friday," Sharma said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.15% to 101.20 points.

Brent crude, the international benchmark, gained 0.74% to $73.24 per barrel in futures trade. Forex traders said crude oil levels of $73 per barrel will act as a support for the domestic unit as India, the world's third-largest oil importer, stands to benefit from cheaper oil.

In the domestic equity market, the 30-share BSE Sensex declined 151.48 points, or 0.18%, to close at 82,201.16 points, while the Nifty was down 53.60 points, or 0.21%, to 25,145.10 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, as they purchased shares worth ₹975.46 crore, according to exchange data.