Mumbai: The Indian rupee slipped 3 paise to 95.97 against the US dollar in early trade on Wednesday, September 30, as demand for dollars from state-run oil marketing companies and firm crude oil prices weighed on the currency.
Trading remained confined to a narrow range, with dollar sales by state-run banks on behalf of the Reserve Bank of India helping keep the USD/INR exchange rate below 96.00.
At the interbank foreign exchange market, the rupee opened at 95.87 before weakening to 95.97. The currency had ended Tuesday at 95.94, marginally stronger and just below the psychologically significant 96-per-dollar mark.
The early movement reflected continued pressure from oil-related dollar demand, even as central bank intervention helped limit the currency’s decline.
RBI Intervention Restricts Dollar Gains
Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, said dealers had reported dollar sales by state-run banks.
He noted that the latest weekly decline of USD 14.9 billion in foreign exchange reserves, taking the total to USD 766 billion, was consistent with sizeable RBI intervention.
Dollar sales across spot and forward markets have helped restrain the USD/INR pair, according to the report.
Foreign Outflows Keep Pressure Intact
Foreign portfolio outflows of around USD 2.2 billion this month, alongside firm US bond yields, continued to weigh on the rupee.
Exchange data showed foreign institutional investors sold Indian equities worth Rs 9,980.22 crore on a net basis on Tuesday.
Meanwhile, the dollar index, which measures the greenback against six major currencies, edged up 0.04 per cent to 101.40.
Brent Crude Rises Above USD 103
Brent crude futures climbed 0.82 per cent to USD 103.43 a barrel, adding to pressure from oil importers’ dollar requirements.
Domestic equities moved higher in early trading. The Sensex gained 190 points to 72,733.04, while the Nifty advanced 22 points to 22,735.20.
Currency traders continued to monitor crude prices, foreign flows and RBI activity for further direction.
