The rupee stayed range-bound and settled 4 paise lower at 83.50 (provisional) against the U.S. dollar on May 16, weighed down by unabated foreign fund outflows amid investors' weak appetite for riskier assets.
However, a firm trend in domestic equities supported the local unit and restricted its losses, forex traders said.
The rupee remains under pressure due to ongoing elections and foreign fund outflows, and the same shall subside once the results are out, they added.
At the interbank foreign exchange market, the local unit traded in a narrow range. It opened at 83.45 and touched an intraday high of 83.44 and a low of 83.50.
The domestic unit finally settled for the day at 83.50 (provisional), down 4 paise from its previous close.
On May 15, the rupee had settled at 83.46 against the U.S. dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 104.40, higher by 0.06%.
Brent crude futures, the global oil benchmark, fell 0.33% to $82.48 per barrel.
Oil price has corrected substantially following a surge to $93 per barrel and is currently hovering around $82 per barrel. This decline in oil prices is set to have a beneficial effect on India's trade balance, especially considering that petroleum products make up 25% of its total import spending, according to experts.
The reduced oil prices are anticipated to ease the strain on the trade deficit, providing a more positive outlook for the rupee.
On the domestic equity market, the 30-share BSE Sensex advanced 676.69 points, or 0.93%, to close at 73,663.72 points. The broader NSE Nifty settled 203.30 points or 0.92% higher at 22,403.85 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on May 15, as they offloaded shares worth ₹2,832.83 crore, according to exchange data.
