Mumbai: The rupee pared its initial gains and settled for the day 3 paise higher at 83.87 against the American currency on Monday, weighed down by a surge in crude oil prices.

Forex traders said the Indian rupee gained in morning trade on rise in domestic markets and a weak US dollar. However, a surge in crude oil prices capped sharp gains for the local unit. At the interbank foreign exchange market, the local unit opened at 83.83 and touched an intra-day high of 83.80 against the US dollar and a low of 83.91.

The domestic currency finally settled at 83.87, 3 paise higher from its previous close. On Friday, the rupee traded in a narrow range and settled higher by 3 paise at 83.90 against the American currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.07 per cent higher at 100.78. The US dollar had witnessed a sharp correction and fell to the lowest level since July 2023, on dovish comments by Fed Chair Jerome Powell at the Jackson Hole Symposium.

“We expect the rupee to trade with a slight positive bias on risk in global risk sentiments amid dovish Fed speak and rising expectations of a rate cut by the Fed in September. However, geopolitical tensions in the Middle East and rising crude oil prices may cap the sharp upside,” said Anuj Choudhary — Research Analyst at Sharekhan by BNP Paribas.

Meanwhile, Brent crude, the global oil benchmark, advanced 0.92 per cent to USD 79.75 per barrel. On the domestic equity market front, Sensex advanced 611.90 points, or 0.75 per cent, to close at 81,698.11 points. The Nifty rose 187.45 points, or 0.76 per cent, to 25,010.60 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Monday, as they purchased shares worth Rs 483.36 crore, according to exchange data.

India’s forex reserves had jumped USD 4.546 billion to USD 674.664 billion during the week ended August 16, the Reserve Bank of India said on Friday. In the previous week, the forex kitty had dropped USD 4.8 billion to USD 670.119 billion.