Rupee opens flat against US dollar in early trade

The rupee opened on a flat note and edged higher by 2 paise to 72.94 against the US dollar in opening trade on Wednesday, amid positive domestic equity market. At the interbank forex market, the domestic unit opened at 72.96 against the US dollar and inched higher to 72.94 against the greenback, registering a rise of just 2 paise over its previous close. On Tuesday, the rupee had settled at 72.96 against the American currency.

"Rather than the higher than expected gross borrowing figure for FY22, bond markets seem to have been spooked more on account of slower than expected return on the path of fiscal consolidation," said Abhishek Goenka, Founder and CEO, IFA Global.

Goenka further added that even comforting statements from rating agency S&P about the budget not having any material impact on India's credit factors were not enough to soothe the markets. "The RBI so far has refrained from announcing an OMO and that is adding to nervousness," he noted. Analysts said that traders remained cautious ahead of Reserve Bank of India (RBI) monetary policy outcome to be announced on Friday.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.16 per cent to 91.05. On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 395.64 points higher at 50,193.36, and the broader NSE Nifty advanced 126.55 points to 14,774.40. Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 6,181.56 crore on a net basis on Tuesday, according to exchange data. Brent crude futures, the global oil benchmark, rose 0.45 per cent to USD 57.72 per barrel.