The rupee witnessed range-bound trading in initial deals against the US dollar on Monday, as market participants remained on the sidelines ahead of the release of key domestic macroeconomic data.
Forex traders said the 84.00 level is acting as a psychological resistance for the USD/INR pair. Market participants are also awaiting cues from the Indian CPI inflation and IIP numbers, scheduled to be released later in the day.
At the interbank foreign exchange, the rupee opened at 83.95 against the greenback and traded in a tight range. In initial trade it touched 83.96, registering a fall of 1 paisa over its previous close.
On Friday, the rupee settled higher by 2 paise at 83.95 against US dollar.
"The Indian rupee is expected to be calm as the Reserve Bank continues to buy dollars at lower levels and sell a smaller quantity to keep the rupee in a small range," Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP said.
The Reserve Bank of India (RBI) seems to be protecting 83.96 for now. The market also awaits US CPI inflation data on Wednesday, Bhansali added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.08 per cent higher at 103.22.
Brent crude, the global oil benchmark, advanced 0.18 per cent to $79.80 per barrel.
On the domestic equity market front, Sensex declined 269.65 points, or 0.34 per cent, to 79,436.26 points. The Nifty fell 74.65 points, or 0.31 per cent, to 24,292.85 points.
Foreign institutional investors (FIIs) were net buyers in the capital markets on Friday as they purchased shares worth Rs 406.72 crore, according to exchange data.
Meanwhile, India's forex reserves jumped by $7.533 billion to a new record high of $674.919 billion for the week ended August 2, the Reserve Bank said on Friday.