Mumbai

The rupee witnessed range-bound trading and settled higher by 6 paise at 88.20 (provisional) against the US dollar on Monday, as the domestic unit was caught between worries over US trade tariffs and hopes of a FED rate cut.

Forex traders said, likely intervention of the RBI has helped in controlling volatility and preventing a quick depreciation of the local unit.

At the interbank foreign exchange, the rupee opened at 88.25, then touched an intraday low of 88.30 and a high of 88.13 against the greenback during the day. The domestic unit settled for the day at 88.20 (provisional), higher by 6 paise over its previous close.

On Friday, the rupee recovered from all-time lows and settled higher by 9 paise at 88.26 against the US dollar.

Investors are closely monitoring geopolitical developments, and global trade dynamics will be critical for the local unit going forward.

Market attention has now shifted to what the US FED will do on September 17, with expectations of a rate cut creating uncertainty around the dollar's future strength, forex traders said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.07 per cent to 97.48.

Brent crude, the global oil benchmark, was trading 0.40 per cent higher at USD 67.26 per barrel in futures trade.

On the domestic equity market front, Sensex declined 118.96 points to settle at 81,785.74, while the Nifty dropped 44.80 points to 25,069.20.

Foreign Institutional Investors purchased equities worth Rs 129.58 crore on Friday, according to exchange data.

The Reserve Bank data showed on Friday that the country's forex reserves jumped USD 4.038 billion to USD 698.268 billion during the week ended September 5 on the back of a sizable increase in value of gold reserves.

In the previous week, the overall reserves had jumped by USD 3.51 billion to USD 694.23 billion.

Meanwhile, US Commerce Secretary Howard Lutnick asserted that New Delhi must bring down its tariffs or face a “tough time” doing business with the US.

Lutnick made the comments during an interview on Saturday when he was asked whether the US is mismanaging “very valuable relationships” with “important allies” like India, Canada and Brazil with the tariffs imposed on these countries.

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“The relationship is one way, they sell to us and take advantage of us. They block us from their economy, and they sell to us while we are wide open for them to come in (and) take advantage,” Lutnick said.